New Regulations for Financial Advisers


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When you walk into a financial adviser’s office, you expect them to put your best interests above all else — in the same way a doctor would, rather than, say, a car salesman. However, the rules financial professionals must follow can vary depending on where they work and the products they sell.

Tightened Federal Regulations on Retirement Plans

Recently, the Biden administration announced new rules that will require more financial professionals to adhere to the highest standards when providing financial advice about retirement funds. Starting Sept. 23, investment professionals offering services as trusted advisers will be required to act as fiduciaries when customers seek advice on individual retirement accounts, 401(k)s, and similar tax-advantaged funds.

This higher standard aims to minimize conflicts of interest and ensure that advice given is in the clients’ best interests rather than solely benefiting the professionals providing the advice. The rule, set to be fully effective by late 2025, will be published in the Federal Register on Thursday.

The changes, issued by the Department of Labor, aim to close loopholes that allowed many investment professionals to avoid fiduciary status, particularly when clients rolled over their savings from a 401(k) plan to an individual retirement account. These transactions, totaling nearly $800 billion in 2022, often represent a person’s life savings and were not always covered by investor protections.

Tim Hauser, from the Labor Department, emphasized the importance of receiving prudent and loyal advice without misleading information when managing retirement investments. The goal is to ensure that the advice provided aligns with the clients’ best interests, regardless of the recommended product.

This update to the federal retirement law, ERISA, which dates back to 1974, marks a significant effort to strengthen investor protections in the retirement planning landscape. The changes have been a subject of debate across three presidential administrations over more than a decade.

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