DOL Rule Dramatically Changing 401k Advice

Now that we know that the DOL fiduciary rule will go into effect June 9th, 401k and 403b plan sponsors need to start paying attention to the likely change in the relationship with their record keepers and advisors especially those providing investment education and advice. Also likely to change are the fees charged so play close attention to the new agreements you may be asked to sign and who is or is not a fiduciary.

The recent DOL FAQ on the new fiduciary rule tried to clarify what would be considered education rather than advice but that line will be tested, perhaps in court as the wave of 401k and 403b lawsuits continue.

NY based law firm of Bond, Shoeneck & King suggests:

To the extent service providers are providing more than general investment education, the parties should be making good faith efforts to modify the service arrangements, as necessary, to comply with the new and revised rules. For example, if the assessment reveals that participants are offered access to individualized investment advice, and if the advisor is compensated (directly or indirectly) by the plan or by participants for that advice, then the advisor should (among other things) acknowledge the advisor’s fiduciary status and provide details regarding how the advisor complies or intends to comply with the new and revised conflict of interest rules.

What is not considered to be advice according to the DOL’s FAQ includes:

  • Emails urging participants to increase deferrals with benefits specific to that person;
  • Online tools that suggest how well a participant is doing on their path to retirement; and
  • Suggestions to increase contributions to take full advantage of a company’s match

Robo’s advisors can get relief under BICE as long as fees are level.


Meanwhile, some providers like Fidelity see the new fiduciary rule as an opportunity to provide fiduciary advice to 401k and 403b plans and participants amending agreements with plans under $50 million with more explicit changes for larger plans causing concern by plan advisors.

As ERISA plan fiduciaries, sponsors need to understand who is providing advice and education, who is acting as a fiduciary and whether the fees are reasonable all of which will be affected by the new DOL rule. June 9th is the start of a major transition.


Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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