New rules affect retirement savings advice

On April 6, 2016, the Department of Labor (DOL) issued new “conflict of interest” rules regarding financial advice as it relates to retirement plans and IRAs. The new DOL rules generally hold financial professionals to a fiduciary standard if they receive compensation for providing investment advice to retirement plan participants or IRA owners, which means they must act impartially and in their clients’ best interests. Here are answers to some basic questions about the new rules. What is a “fiduciary” and why does it matter? “Fiduciary” is a term for an individual who has a legal or ethical duty to act for another’s benefit. When a financial professional provides investment advice or recommendations to an IRA owner or an employer-sponsored retirement plan participant, and in doing so receives compensation, the new rules generally hold the financial professional to a fiduciary standard. In other words, the financial professional must put the client’s best interest ahead of his or her own. To that end, the rules are designed to eliminate potential conflicts of interest. One example is a situation in which a financial professional would get paid more for one investment product than another, creating a possible conflict when he or she