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

April 27, 2016 6 Comments

Azzad calls for DOL to reinforce shareholder rights for pension plans

FALLS CHURCH, Va., March 22, 2016 — Azzad Asset Management, investment advisor to the Azzad Funds, announced today that it has joined a coalition of socially responsible financial firms in calling for the U.S. Department of Labor (DOL) to rescind a bulletin that undermines the exercise of shareholder rights by fiduciaries. Organized by the Forum for Sustainable and Responsible Investment (US SIF), of which Azzad is a member, the campaign is intended to persuade the DOL to explicitly permit retirement plan sponsors to address sustainability concerns by engaging directly with publicly traded companies in which they invest. The group argues that issues such as climate change, human rights abuses, and excessive executive compensation should be addressed by retirement plan fiduciaries in the interest of capturing the long-term socioeconomic benefits that can accrue to plan participants. In a letter to Labor Secretary Tom Perez, US SIF CEO Lisa Woll states that, “202 institutional investors or money managers representing $1.72 trillion in U.S.-domiciled assets filed or co-filed shareholder resolutions on issues at publicly traded companies from 2012 through 2014.” She goes on to argue that, although many asset managers are engaged in active ownership, pension plans are absent because the bulletin in question

March 22, 2016 No Comments