The Labor Department said Tuesday that it has finalized its new fiduciary rule — the Retirement Security Rule — "to protect the millions of workers who are saving for retirement diligently and rely on advice from trusted professionals on how to invest their savings."
The final rule updates the definition of an investment advice fiduciary adopted in 1975 under the Employee Retirement Income Security Act and the Internal Revenue Code. It takes effect Sept. 23.
Related: DOL Fiduciary Rule: A Timeline
The rule, set to be published Thursday in the Federal Register, "applies when trusted financial services providers give compensated investment advice to retirement plan participants, individual retirement account owners and plan officials responsible for administering plans and managing their assets," Labor explained.
"Investors typically rely on financial professionals to navigate their way through a complex marketplace," said Lisa Gomez, head of DOL's Employee Benefits Security Administration, during a Tuesday morning call with reporters.
"But often investment professionals making the recommendations have significant conflicts of interest and often they have no obligation under the 1975 rule to act in the retirement investor's best interest even though they hold themselves out as doing just that. That's not right."
Labor's new rule "fixes the 1975 rule's shortcomings," she added.
