Advisor Solutions - Volume 2 Issue 2 Supplement - S3

2010 CompLIanCe InsIghts

Update on Retirement Plan Advice Rules
By Rebecca McReynolds

Congress and the Department of Labor take up the debate around fiduciary standards

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t all boils down to two little words: “best” or “sole.” Should advisors be required to act in the “best” interest or in the “sole” interest of clients when providing guidance to participants in ERISAgoverned defined contribution programs, such as 401(k) plans? The fiduciary standard that has long separated the independent Registered Investment Advisor (RIA) from the registered representative of a broker-dealer is now the flashpoint in the debates in Congress and the Department of Labor (DOL) as each group tries to codify the type of advice that 401(k) plan participants can receive. While the average observer may shrug off the debate as merely a matter of semantics, the final version of the regulations will have significant ramifications for who gets access to a multi-tril-

lion-dollar piece of the financial services market, says Diahann W. Lassus, CFP® and President of Lassus Wherley in New Providence, N.J. If the stricter “sole interest” standard is applied, no individual or firm that currently works with or wants to work with 401(k) plans in the future can in any way benefit from the recommendations being made. “By definition, that means that you would have to be an RIA to work with 401(k) plans,” explains Lassus, who is the pastPresident of the National Association of Personal Financial Advisors (NAPFA). That was the language originally included in the 401(k) Fair Disclosure and Pension Security Act of 2009, which would have given control of the entire 401(k) advice market to RIAs. But in December

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Advisor Solutions - Volume 2 Issue 2 Supplement

Table of Contents for the Digital Edition of Advisor Solutions - Volume 2 Issue 2 Supplement
