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New DOL reg won't change how large companies offer advice

A new rule regulating fiduciary investment advice wont necessarily affect the way large 401(k) providers do business, but it will give many smaller companies the opportunity to bundle investment advice as part of their 401(k) and IRA plans.

By Paula Aven Gladych | Updated on October 26, 2011
A man is reflected walking past the window of the Charles Schwab headquarters in San Francisco, Monday July 17, 2006. (AP Photo/Eric Risberg)

A new rule regulating fiduciary investment advice won’t necessarily affect the way large 401(k) providers do business, but it will give many smaller companies the opportunity to bundle investment advice as part of their 401(k) and IRA plans.

The regulation, which was finalized by the U.S. Department of Labor’s Employee Benefits Security Administration this week, will allow fiduciary investment advisors to receive compensation from investment vehicles they recommend if the investment they provide is based on a computer model that is certified as unbiased and applies generally to accepted investment theories, or the advisor is compensated on a “level-fee” basis, meaning the fee doesn’t vary based on the investments a participant selects.

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