Biden Administration Finalizes Retirement Security Rule to Protect Investors

The Department of Labor has announced a new Retirement Security rule that aims to protect millions of workers who are diligently saving for retirement. The rule, which will take effect on September 23, 2024, updates the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.

According to the announcement, the rule will require financial services providers to follow high standards of care and loyalty when making investment recommendations. This includes giving prudent advice, avoiding conflicts of interest, and charging reasonable fees for their services.

The Certified Financial Planner Board has praised the new rule, stating that it addresses regulatory gaps and protects Americans from the costly effects of conflicts of interest. A recent survey found that 92% of Americans expect financial professionals to provide retirement savings advice in their clients’ best interests.

The rule was first proposed in October 2023, with the Council of Economic Advisers estimating that Americans lose up to $5 billion a year due to conflicts of interest in retirement investments. The Biden Administration’s goal with this rule is to provide investors with faith that their financial professional is delivering retirement investment advice in their best interest.

Overall, the new Retirement Security rule is aimed at ensuring sounder financial advice, lowering investment fees, and giving every American saving for retirement greater peace of mind about their portfolios.