April 26, 2024

Fred Reish Comments on New DOL Rule in MarketWatch, Financial Advisor and Law360

Benefits and executive compensation partner Fred Reish commented on the Department of Labor’s (DOL) new fiduciary rule that requires advisers to act in their clients’ best interest when giving advice on retirement savings – the Retirement Security Rule.

Effective September 23, with a one-year grace period for full compliance, the rule extends the fiduciary standard to anyone selling investment advice to plan participants and IRA holders, including insurance agents and brokers.

Reish noted in Financial Advisor, that the DOL eased up in some areas that are of note to the brokerage and insurance industries. For instance, the DOL added language that specifically allows reps and agents to make sales pitches and conduct investor education without triggering the fiduciary rule.

For the first time, independent producers will need to satisfy the fiduciary-level duty of care and duty of loyalty for rollover recommendations, which will require firm-level education and support, Reish warned. 

In Law360, Reish said in the case of someone recommending a rollover out of a 401(k) plan into an IRA or an annuity, “the agent or the adviser will have to put in writing why a rollover is in the best interest of the participant and will have to give that to the participant.”

“That's going to create some tension, where people have to be careful about making recommendations, because they're going to have to document them,” he added.

In MarketWatch, Reish shared, “My father felt awkward asking his adviser how he was making money because he trusted him. When it comes to money, it is better to feel awkward and ask the right question, even with a higher standard.”

Full articles are available to MarketWatch and Law360 subscribers.

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