Employers that sponsor retirement savings plans overwhelmingly favor recent proposals that would require investment advice from plan providers and advisers to be in the best interest of their employees, a new AARP study finds.
Nearly nine in ten (89%) employers say they would favor requiring defined contribution plan providers give advice that is in the best interest of plan participants, the study says. Just 7% of plan sponsors say they oppose such a fiduciary requirement.
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Eighty-eight percent of plan sponsors also say they would favor requiring DC providers to clearly explain to plan participants if the providers advice is not obligated to be in the participants best interest.
Financial institutions and advisers that provide DC retirement plans often field inquiries from plan participants, providing investment-related advice that may be interpreted by employees as having their best interest in mind. As many in the industry know, current regulations dont require all providers to be fiduciaries. Recently, the Department of Labor has proposed an update to existing regulations to require them to do so, in addition to the largely expected rule that will extend fiduciary requirements to retirement advisers.
The survey was administered online between June 2013 and September 2013. The findings are based on the responses of 3,010 employers that offer one or more defined contribution plans, such as a 401(k), (403(b) or 457.
Despite the large share of plan sponsors who favor requiring DC provider advice to be in the best interest of plan participants, an equally large share (91%) of plan sponsors say they trust their DC provider to offer investment advice that is in the best interest of plan participants.
Over three in four (77%) plan sponsors agree that it is important for DC plan participants to receive investment advice from an independent adviser who does not make money from the plans investments.
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