Labor Department cracking down on retirement savings advice

The Labor Department will be cracking down on retirement savings advice to safeguard workers’ interests, the Biden administration announced Tuesday. 

The Labor Department announced that it has finalized its Retirement Security Rule, which aims to protect American workers who are saving for retirement and relying on advice from fiduciaries for it. The new rule will update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.

The rule will require “trusted investment advice providers to give prudent, loyal, honest advice free from overcharges,” according to the department.

The department said these fiduciaries must avoid giving recommendations “that favor the investment advice providers’ interests — financial or otherwise — at the retirement savers’ expense.” 

The department also said the rule will require financial institutions to have policies and procedures to address potential conflicts of interest and to make sure the advice providers follow the new guidelines.

“America’s workers and their families rely on investment professionals for guidance as they save for retirement,” Acting Labor Secretary Julie Su said in a statement.

“This rule protects the retirement investors from improper investment recommendations and harmful conflicts of interest. Retirement investors can now trust that their investment advice provider is working in their best interest and helping to make unbiased decisions.”