Pioneer Investments is offering registered investment advisors a new tool to help them comply with the U.S. Department of Labor's new fee disclosure rules. The company has devised a model advisory agreement designed to meet the requirements of rule 408(b)(2), which requires they provide 401(k) sponsors and other retirement fiduciaries with standardized disclosures about their business before they provide advisory or other services to retirement plans.
The regulation, which takes effect July 1, requires RIAs and other covered service providers to provide written disclosure regarding their services, compensation and fiduciary status to retirement plan clients in advance of entering into contracts.
To develop the Advisory Agreement, Pioneer partnered with two leading firms in the area of retirement plan fiduciary responsibility, Drinker Biddle & Reath LLP, a national law firm, and fi360, a specialist in investment fiduciary responsibility.
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"We have found that retirement plan advisors generally understand what 408(b)(2) represents, but find it a challenge to incorporate the requirements into their own practice," said Jamie Axford, senior vice president and director of Business Development, Investment Only and Retirement Group at Pioneer. "This model Advisory Agreement provides advisors with an easy-to-understand solution for meeting their obligations under the new rule."
Laura Palmer, senior vice president, national sales manager at Pioneer, added that this service will help Pioneer's RIA clients meet their obligations under the new rules. "With our many years of experience supporting the RIA channel, we know that their first priority is to serve the needs of their clients. This service helps them simplify the compliance process, allowing them to focus more of their time on their clients."
"The new 408(b)(2) disclosures are effective July 1, and if an adviser hasn't delivered its mandated disclosures by then, its relationships with ERISA plans are converted into prohibited transactions," said Fred Reish, a partner in Drinker Biddle & Reath's Employee Benefits & Executive Compensation Practice Group and Chair of the firm's Financial Services ERISA team. "For most advisers, the 'best practice' will be to make the disclosures in a new ERISA-specific service agreement," Reish said.
Pioneer Investments is the trade name for Pioneer Global Asset Management S.p.A. and its subsidiaries, a global investment firm with offices in 27 countries and approximately $210 billion in assets under management as of Dec. 31, 2011, of which approximately $60 billion was managed in the U.S.
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