DES MOINES, Iowa — The Department of Labor issued a new regulation Monday designed to improve access to expert investment advice for workers with 401(k) and individual retirement accounts.
The rule makes it easier for providers of 401(k) plans such as Charles Schwab, Vanguard, and Principal Financial to offer individual account advice and bundle it with other services.
Currently an employer might offer a Vanguard 401(k), for example, but in order to offer advice, it must contract with an independent investment adviser to comply with regulations against conflicts of interest.
Previous government regulations prohibited plan providers from offering investment advice if their advisers might benefit financially from their recommendations. Because many 401(k) providers offer their own mutual funds and other investment services, an in-house adviser or the plan provider could benefit financially if investors were steered toward its funds.
Although large employers were more likely to hire an independent adviser, many smaller companies probably did not. They now may be able to do so, said David Wray, president of the Profit Sharing/401(k) Council of America, a not-for-profit association of companies that sponsor retirement plans.
