The US government has unveiled a new rule that will mandate retirement advisors to put their clients’ best interests first ahead of their own profits.
The new rule, first proposed over five years ago, requires retirement advisers to act as fiduciaries when managing retirement accounts. Previously these advisers had to only meet a suitability standard.
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Under the rule, providers of advice and products to the country’s 401(k) plans and all IRAs will be considered fiduciaries.
"Being a fiduciary means that the adviser must provide impartial advice in their client’s best interest and cannot accept any payments creating conflicts of interest unless they qualify for an exemption intended to assure that the customer’s interests are protected.
"This change expands protections to IRA owners and people rolling over their savings into an IRA from a 401(k), who now must receive investment advice in their best interest," the government said in a statement.
The rule excludes education in the definition of retirement investment advice, as a result advisers can continue to offer general education on retirement saving without triggering fiduciary duties, the government said.
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By GlobalDataThe new rule is expected to be effective from next April.
