Charles Schwab, like most large 401(k) providers, uses a third party model of giving investment advice, where a third party acts as fiduciary. This ruling does not impact Schwab's ability to use a third party for its investment advice.

"We've seen great success with how we're doing it," said Gray. The new regulations could benefit smaller employers, especially if they have investment advisors on a plan and are not working with someone with a third party model, he said. "This makes it clear how that advisor could deliver [advice] to participants."

Employers who may have been reluctant to offer advice in the past because of a lack of clarity regarding the rules now have an opportunity to begin offering advice as part of their package, Gray said. "I think this is a green light from the Department of Labor to move forward to this approach or to take the approach Schwab and many of our competitors are using as well."

The new regulation also shows advisors how to comply with other conditions and safeguards in the statutory exemption, including requiring a plan fiduciary that is independent of the investment advisor or its affiliates to authorize the advice arrangement. Investment advisors relying on the exemption also must abide by recordkeeping requirements.

"Given the rise in participation in 401(k)-type plans and IRAs, the retirement security of millions of America's workers increasingly depends on their investment decisions," said EBSA Assistant Secretary Phyllis C. Borzi in a statement. "This rule will make high-quality fiduciary investment advice more accessible, while providing important safeguards to minimize potential conflicts of interest."

The prohibited transaction rules in the Employee Retirement Income Security Act and the Internal Revenue Code prevent fiduciary investment advisors from recommending plan investment options if they receive additional fees from the investment providers. Although these rules protect participants from conflicts of interest, ERISA provides exemptions from the rules in appropriate circumstances and permits the Department of Labor to grant exemptions that protect participants. The new regulation implements an exemption that Congress enacted as part of the Pension Protection Act of 2006 to improve participant access to fiduciary investment advice.

Since this regulation "only applies to fiduciaries, it seems like we should have had the fiduciary rule clarified before we had this," said Christopher Carosa, CTFA, a chief contributing editor for FiduciaryNews.com, a leading provider of essential news and information, blunt commentary and practical examples for ERISA/401k fiduciaries, individual trustees and professional fiduciaries.

He added that the "level-fee rule will make it difficult in practice for mutual fund companies to offer advice if their funds are in the mix, unless all their funds have the same fees. This will make it almost impossible for mutual fund companies offering index or active funds, equity or bond funds and domestic or foreign funds."

The Department of Labor "made a good move to allow inclusion of historic performance in the computer-generated recommendations, as, in the end, that's really the only measure that means anything to the investor, assuming the funds don't have 12b-1 fees or commission, because that does have a (usually) negative impact," Carosa said.

Vanguard and Principal Financial Group both said they support the DOL's implementation of the new regulation, but they are happy to continue using independent third parties to provide advice for their services.

Vanguard said in a statement that it "offers a full suite of advice services for participants through our proprietary advice programs as well as partnerships with third parties. The DOL's validation of both approaches enables plan sponsors to continue to choose from among this wide range of advice offerings those that best meet the needs of their participants. Vanguard is squarely focused on helping participants reach their retirement goals, and these regulations confirm that we can continue to offer sponsors and participants a range of professional advice services to help make investing for retirement easier."

A spokesperson for the Principal Financial Group said that, "we plan to continue what we've been doing, which is offering investment advice services to plan participants using an independent third party to provide the advice."   

The Department of Labor estimates that about 134,000 defined contribution plans covering 17 million participants and beneficiaries will offer investment advice because of the new rule and that about 3.5 million of these participants and beneficiaries will seek advice from investment advisory firms servicing their employer-sponsored retirement investment plans. It also estimates that 17 million IRA beneficiaries will seek investment advice because of the statutory exemption.

Although the cost to implement the final regulation will be high, the Department of Labor believes that having access to expert investment advice will reduce investment mistakes by between $7 billion and $18 billion annually at a cost of between $2 billion and $5 billion a year.

The DOL estimated that 16,000 investment advisory firms would begin providing investment advice pursuant to the statutory exemption.

"The final regulation will provide important benefits to society by extending quality, expert investment advice to more participants, leading them to make fewer investment mistakes," according to a statement by the Department of Labor. "The Department believes that participants, after having received advice covered by the exemption, may pay lower fees and expenses, engage in less excessive or poorly timed trading, more adequately diversify their portfolios and thereby assume less uncompensated risk, achieve a more optimal level of compensated risk, and/or pay less excess taxes."

The final rule goes into effect on Dec. 27, 2011, and will be applicable to transactions occurring on or after that date.