In “New Retirement Bill Calls for Brokerage Window Warning,” executive compensation and benefits partner Fred Reish explained the proposed Providing Complete Information To Retirement Investors Act, aimed at warning investors about the risks of environmental, social and governance focused investing.
Reish noted that “the concept of the bill may be helpful” to investors who may not understand the risks of investing their 401(k) savings outside of their plan’s investment menu.
While Reish hopes “participants know that they’re on their own when investing through the brokerage accounts, I suspect that is not the case,” he said. “While some plan sponsors educate participants to that fact, I don’t think that all do.”
He noted the bill “requires a warning to participants that investments in a brokerage account offered by a participant-directed plan, for example, a 401(k) plan, are not prudently selected and monitored by fiduciaries.”
The bill, Reish explained, “would mandate language that tells participants that they are taking more responsibility and risk when they invest through the brokerage account.”
The full article is available for ALM subscribers.