Commentary: After much anticipation, the Department of Labor unveiled a rule on Tuesday that could establish a fiduciary responsibility for brokers working with retirement accounts. The proposal still has to go through the comment period, but if passed, it promises to be a step toward reducing conflicts of interest while urging advisers to work in the best interest of their clients.
On the 401(k) level, this could hit wirehouses and brokers in the wallet to some degree. It continues the tradition set forth by the DOLs
In the rules laid out in the proposal, plan advisers will need to be even more transparent with fees. It states that they must clearly and prominently [disclose] any conflicts of interest, like hidden fees often buried in the fine print or backdoor payments, that might prevent the adviser from providing advice in the clients best interest. That means that nontransparent practices like
Lets face it the fee issue needed to be addressed. As revealed in Frontlines 2013 investigative report
Simplicity and transparency need to be at the very core of these retirement plans, and thats the aspect of this proposal that is spot on. It protects workers while also taking some of the heat off of employers, who have been pressured to re-examine their plans due to a recent barrage of
Our regulatory bodies should have never allowed two different standards to begin with. The brokers representing wirehouses are salespeople using the adviser label as a Trojan horse. The popular
At the end of the day, the DOL is merely putting lipstick on a pig. Theyll need to dig deeper to remedy core problems of our industry. With that said, it will be interesting to see if this actually goes through. My prediction is that the bureaucratic process will either stifle the rule or dilute it to the extent that it brings nominal change. I hope, for the sake of retirement savers across the country, they prove me wrong.
Chris Markowski is the founder of