Julie A. Su Secretary of Labor | Twitter Website
The Biden-Harris administration has taken a significant step to safeguard the interests of retirement savers by updating the definition of an investment advice fiduciary. The U.S. Department of Labor has finalized the Retirement Security Rule, aiming to protect workers diligently saving for retirement who rely on trusted professionals for investment advice.
According to Acting Secretary Julie Su, "America’s workers and their families rely on investment professionals for guidance as they save for retirement." The rule seeks to ensure that investment advice providers offer prudent, loyal, and honest recommendations that are free from overcharges. Su emphasized that retirement investors can now trust that their advisors are working in their best interest and helping them make unbiased decisions.
Assistant Secretary for Employee Benefits Security Lisa M. Gomez highlighted the necessity of updating the regulations, stating, "These new rules update regulations created nearly a half-century ago that simply are not providing the protections America’s workers need and deserve for their retirement savings so that they can retire with dignity."
The updated definition of an investment advice fiduciary will come into effect on September 23, 2024, and will apply to financial services providers offering compensated investment advice to retirement plan participants, IRA owners, and plan officials. The rule mandates that financial institutions overseeing investment advice providers have policies to manage conflicts of interest and ensure compliance with the new guidelines.
The administration's effort aligns with the goal of protecting retirement investors and increasing their savings. By preventing conflicts of interest and ensuring that advice providers act in the best interest of clients, the rule aims to secure retirement funds from unnecessary costs and biased recommendations.
The amendments to the prohibited transaction exemptions under ERISA and the Internal Revenue Code require investment advice fiduciaries to provide retirement investors with advice that is prudent, loyal, honest, and free from overcharges. These changes aim to create a uniform and protective framework that fosters fair competition among investment professionals and prioritizes the interests of retirement savers.
