By striking a balance between new protections for consumers with additional burdens on the financial services industry, Financial Advisor Tim Hayes believes the Department of Labor (DOL) hit a home run with their new retirement advice rule.
Fixing the Law
By eliminating a 1975 rule, made when pension plans were much different than they are today, the Department of Labor rectifies the contradiction that financial advisors with conflicts of interest are providing financial advice to retirement accounts even though ERISA, the law governing these accounts prohibits this from happening.
What does the new rule mean for consumers? “If you have a 401(k), the advisor fees might come down. If you roll over the 401(k) to an IRA, the fees in the IRA should be the same or lower than what they were in the 401(k). If they are not, then, the financial advisor must pledge to do what is in your best interest.”
These are the opinions of Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only, and should not be construed or acted upon as individualized investment advice.