The financial service industry, and especially the 401k world, is abuzz with the DOL’s new fiduciary rule. It dominated discussions at the NAPA Summit, the industry convention, this week in Nashville. But how does it really affect plan sponsors, should they be worried and is this a good or bad thing for them? A retirement plan advisor and frequent blogger poses and answer seven practical questions companies sponsoring a defined contribution (DC) plan should be asking. Let’s tune in:
- Does it affect the fiduciary responsibility of a plan sponsor? Not really although it will affect relationships with vendors like plan advisors, which is part of their fiduciary responsibility, and could add more co-fiduciaries to the plan.
- What do I have to do and when? The effective dates are April 2017 and January 2018 but no action is required by plan sponsors.
- Is the rule bad for me and my employees? The blogger asks what’s the downside in requiring that advisors to act in the best interest of their clients? Critics claim that less affluent clients will have less access to financial advice. Usually where there is money and a need, someone will figure it out.
- Is the DOL the Obamacare of the retirement industry? The state auto-IRA initiatives are more like the ACA than this rule.
- Is the rule likely to be repealed before it goes into effect? Although a bill was recently introduced in Congress to repeal the rule, experts are predicting that it will go into effect as planned.
- What’s the impact on your advisor? Less if they are a registered investment advisor or RIA who already have to act in their client’s best interest v. suitability standards for brokers.
- Can I still work with an advisor that is part of a brokerage firm? Yes, but that relationship is likely to change.
Sometimes nothing is good news.
Additional Resources on this topic:
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http://lawtonrpc.com/seven-things-plan-sponsors-say-want-know-new-fiduciary-regs/
