Financial adviser providing investment advice to individuals IRA, 401 (k) ) S and other retirement accounts have new rules to follow from Friday aimed at protecting investors from advisory conflicts of interest.
In a new regulation of the Ministry of Labor known as the Fiduciary Security Regulation, brokers, investment advisors and other financial professionals will be 401 (k) economically meaningful to you. To an IRA about being-and not just because your adviser wants a fee to increase his or her income.
Given that employer-sponsored retirement plans are increasing the population of well-balanced older workers and approaching retirement, DOL says workers are leaving and their assets out of the plan. I thought it was necessary to protect the workers when taking over. DOL is the main regulator of employer-sponsored retirement plans, and all service providers for such plans are now required to act as trustees.
Beginning June 9, financial companies and their advisors providing investment advice on IRA and other retirement plans must meet the following fiduciary standards of conduct: .. Caring about their reputation, they have planned to continue their business for a long time and have always acted in the best interests of their clients. Also, the advisor's recommendation to roll over a 401 (k) to an IRA may be a better option, but before acting on it, the advisor needs to review the benefits and costs of the employer's plan together. there is.
Large employer plans have strong bargaining power with investment managers and service providers and use their size. , At a minimum, negotiate institutional pricing for investment management. Available costs.
For example, on a large plan, offering an S&P500 index fund with an annual total investment cost of less than 0.05% compared to the average cost of similar retailers It's not uncommon. An index mutual fund that can carry 7 to 10 times more fees.
There are good reasons to transfer retirement assets to the IRA. Some of these include more investment options, more flexible withdrawal capabilities, and access to ongoing investment management and advice. To make the best decision, it is important to objectively compare the benefits and costs of an IRA with the benefits and costs of leaving a retirement asset in your previous employer's 401 (k) plan.
DOL fiduciary rules require that all advisors do so when providing this advice.
View all Ray Martin articles on CBS MoneyWatch »
Ray Martin has been a financial adviser and individual since 1986. He regularly appears as a contributor to the CBS Early Show, CBS NewsPath, and as a columnist on CBS Moneywatch.com and NBC-TV's morning newscast TODAY. He has also appeared at The Oprah Winfrey Show and is the author of two books.
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