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Don Faller, CFP C(k)P

Don Faller, CFP C(k)P, has built a nationally recognized reputation as an expert in matters pertaining to the financial operation of ERISA plans and related retirement benefit programs.

DOL Fiduciary Rule Update: How the Future Will be Changed

The Department of Labor (DOL) has extended the applicability date of the new fiduciary rule and related exemptions to June 9, following a directive from the Trump administration to examine the rule and make sure it doesn’t affect consumers’ ability to get retirement information and financial advice. In general, the rule requires most non-fiduciary financial advisors to follow the fiduciary standard (acting in their clients’ best interest) when recommending investments, charge only reasonable compensation for their services, and avoid making misleading statements. Both 3(21) and 3(38) investment fiduciaries are already required to follow these standards, so the rule will largely affect other advisors, like insurance agents and broker-dealers.

For 401(k) plan sponsors, the new rule will help them keep their 401(k) fees reasonable. Non-fiduciary advisors can recommend any investment as long as they follow the suitability standard, which, stated simply, means this investment meets their clients’ requirements. Non-fiduciary advisors aren’t required to act in their clients’ best interest. They’re free to recommend investments that may pay them higher fees or commissions. However, plan sponsors are required to act as fiduciaries who ARE required to act in the best interest of their plan participants, and that can expose them to liability.

In fact, there have been a number of high-profile lawsuits lately involving 401(k) plans that allegedly had fees that were too high, including companies like Morgan Stanley, Boeing, and Lockheed Martin Corp.1 As a plan sponsor, you need to know that you’re getting the best possible advice from your plan advisor. If your advisor is not a 3(21) or 3(38) investment fiduciary, you may have significant 401(k) plan liability. Furthermore, you may be paying higher plan fees than you need to.

At FiduciaryFirst, we are seasoned in addressing the fiduciary risks faced by our clients. If you are interested in reviewing your plan in light of the proposed DOL rule, contact us today at 866-625-4611.

1 https://www.forbes.com/sites/brianmenickella/2016/09/19/employers-beware-theres-a-tsunami-of-401k-lawsuits-could-your-company-be-next/#1832574bc3de

Tracking Number: 1-616694

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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1060 Maitland Center Commons

Suite 360

Maitland, FL 32751

Phone: 866-625-4611

Fax: 407-740-6113

Email: info@fiduciaryfirst.com 

Disclaimer

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

 

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