I believe the proposed new rule regarding conflicts of interest in retirement advice is an interesting step and has taken many in the industry by surprise. The concern I have with the new rule is that it will add additional compliance burdens.
This ruling will also increase the disclosure requirements to participants, which may increase overall costs, raise the barriers to entry for providing help, and add to the legalese and complexity surrounding various optionsmeanwhile, many participants dont read or understand the current fee disclosures they get with their retirement accounts!
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The details with the new rule still need to be vetted, and the industry will need time to understand to what extent the various to-be-determined consequences could complicate retirement service models. It is an interesting time; and input from the industry and the public has never been more important.
I do not think that more disclosures and transparency is a bad thing, but I have to ask: How does this ruling truly help make things easier to understand and provide the leadership needed for retirement readiness? This ruling may shape the future; whether good or bad is up for debate.
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Ludwig, ChFC, AIF, CRPS, is an LPL Financial adviser with LHD Retirement and EBA retirement columnist. He can be reached at jludwig@lhdretirement.com.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does adviser assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
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