DoL Proposes Delay On Advice Rule Due to Objections from Fiduciary Industry

The DoL, fresh off releasing “final” ruling on participant advice provisions, is now recommending the delay of this rule for two months until further public commentary is considered. As the cartoon to the right from Pensions and Investments illustrates, the DoL’s proposal left a lot to desire. There has been significant push back from Congressman George Miller (D) CA:
While many others agree that 401(k) participants need advice now more than ever, it has to be the right kind of advice from the right kind of advisers, say lawmakers and critics. The final regulations “may undermine retirement savings plans of millions of Americans,” House Education and Labor Committee Chairman George Miller, D-Calif., said. “It will allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts.”
– Robert Powell, Marketwatch.com

The reality is that discerning plan fiduciaries will balk at the idea of providing potentially conflicted, yet hopefully “conflict-managed” advice to their employees. In reality, these plan fiduciaries would have to answer to their participants for doing their due diligence on the advice provider, whether it be and individual adviser (new congressional spelling for a participant advice advisor…just to keep you guessing) or adviser entity.

Speaking as a fee-only, conflict-free 401(k) participant advice/acct mgmt provider, we have found that plan sponsors want a “good story” to tell participants. However, this also may be due to working wil highly paternalistic companies that value their employees well-being…we have been fortunate in that manner.
At the end of the day, there are a few questions that remain:
Do participants need help? YES
Do participants want help? YES
Under the proposed rule, would plan sponsors be able to clearly determine if the advice provided to participants without conflict under the current proposal? PROBABLY NOT
Would this be a good scenario for unsuspecting participants needing help? PROBABLY NOT
So…back to the drawing board.