The Department of Labor today announced proposed rules that would make it easier for participants in defined contribution plans and IRAs to get individual investment advice.
Under the proposals, implementing key provisions in the Pension Protection Act of 2006, advice arrangements in participant-directed DC plans would be OK if offered through computer models independently certified to be unbiased, or if compensation of the adviser providing one-on-one consultation doesnt vary depending on the investments selected, said Bradford P. Campbell, assistant secretary for the Employee Benefits Security Administration, during a teleconference.
The proposals also clarify the ground rules for offering follow-up advice to participants who want additional options beyond computer model offerings.
To qualify as an eligible investment advice arrangement under the proposed rules, Mr. Campbell said that advice had to rely on generally accepted investment theories and take into account a participants retirement age, risk tolerance and investment preferences.
In addition, to qualify as an EIAA, the advice arrangement must be expressly approved by a plan fiduciary and be audited at least annually. The adviser also must disclose to participants all fees or compensation and keep records for at least six years.
During the teleconference, Mr. Campbell said the department estimated the proposed rules would increase worker retirement savings by $10 billion annually.
Mr. Campbell also said comments on the proposed rules, which have been posted on EBSAs website at http://www.dol.gov/ebsa, would be due Oct. 6, 45 days after the planned official publication of the proposals in the Federal Register.
He said the department planned to finish its work on the rules this year but that the final rules wouldnt take effect until next year.