New regulation aimed to improve 401(k) advice

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 their own individual account advice and bundle it with other retirement services. Currently an employer might offer a Vanguard 401(k), for example, but in order to offer advice, it’s required to contract with a separate 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. The Labor Department estimates 401(k) plans covering 17 million participants will begin to offer investment advice under the new rule. It expects about 3.5 million of these participants and beneficiaries to seek advice. The department also estimates 17 million IRA beneficiaries will seek advice under the new rule. About 16,000 investment advisory firms will provide advice. Read more about the new regulation from The Associated Press here.