DOL to issue conflict of interest fact sheet for retirement plans
- The U.S. Department of Labor is moving quickly to answer frequently asked questions (FAQs) about retirement plans before a new administration takes over. EBN (Employee Business News) reports that the labor department plans to issue fact sheets covering the department’s fiduciary rule, which addresses how those with fiduciary responsibilities handle 401ks, IRAs and other retirement plans.
- The rule lays out restrictions on fiduciaries whose handling of participants’ plans represents a conflict of interest. The rule also clarifies who is a plan fiduciary and the difference between advising” and “educating” plan participants. Brokers used to get around being fiduciaries by “educating” plan holders, rather than giving advice. The rule eliminates that loophole and now all financial advisors are fiduciaries.
- According to EBN, the DOL plans to issue three sets of FAQs, the first of which covers who among financial experts are exempt from the fiduciary rule. A subsequent FAQ will address how to find missing beneficiaries.
The new fiduciary rule protects employees and their investments in company-sponsored plans from unscrupulous financial advisors, brokers and others. It’s also added insurance for employers who had little control over advisers’ treatment of employees.
But the rule can be confusing for employees, who might not understand how the relationship between plan adviser and investor has changed. HR can eliminate confusion by communicating the rule in simple, nonfinancial terms through HRMS and other notification channels. New technology, including robo-advisers, are part of ongoing innovation in the space and may help employers overcome new challenges related to the rule.