Understanding the New DOL Fiduciary Rule: What You Need to Know to Stay Ahead of The Changes
Since 1974, when Congress enacted the Employee Retirement Income Security Act (ERISA), the Department of Labor (DOL or Department) has worked to protect America's tax-preferred retirement savings. In the ensuing decades, there has been a dramatic shift in the retirement savings marketplace from employer-sponsored defined benefit plans to participant-directed 401(k) plans, coupled with the widespread growth in assets in Individual Retirement Accounts and Annuities (IRAs). When the basic rules governing retirement investment advice were created in 1975, 401(k) plans did not exist and IRAs had just been authorized. These rules have not been meaningfully changed since 1975.
These changes in the retirement landscape over the last 40 years have increased the importance of sound investment advice for workers, their families and plan fiduciaries. While many advisers do act in their customers' best interest, not everyone is legally obligated to do so and some do not. Many investment professionals, consultants, brokers, insurance agents and other advisers operate within compensation structures that are misaligned with their customers' interests and often create strong incentives to steer customers into particular investment products. These conflicts of interest do not always have to be disclosed and advisers have limited liability under federal pension law for any harms resulting from the advice they provide to plan sponsors and retirement investors. These harms include the loss of billions of dollars a year for retirement investors in the form of eroded plan and IRA investment results, often after rollovers out of ERISA-protected plans and into IRAs.
The Department's conflict of interest final rule and related exemptions will protect investors by requiring all who provide retirement investment advice to plans, plan fiduciaries and IRAs to abide by a "fiduciary" standard—putting their clients' best interest before their own profits. This final rulemaking fulfills the Department's mission to protect, educate, and empower retirement investors as they face important choices in saving for retirement in their IRAs and employee benefit plans.
About Russell M. LaGreca:
Mr. LaGreca works at Morgan Stanley in institutional consulting, high net worth family and corporate client divisions drawing on years of non-profit, estate, financial and executive benefit planning experience. In addition to his work with individuals, institutions and retirement plans, he also supports many of our non-profit staff members in developing planned giving campaigns.
Mr. LaGreca earned the Certified Financial Planner™ certification in May of 2004 and the Chartered Retirement Plans SpecialistSM professional designation in November of 2007. Prior to joining Morgan Stanley in 2006, he spent over 11 years at Legg Mason. Mr. LaGreca focuses on investment consulting for institutions, consultation on 401(k) plan design, employee education & implementation and providing sophisticated planning solutions for high-net-worth clients.
Mr. LaGreca received his Bachelor’s degree in Economics from Loyola College in Baltimore, MD. He is an active member of The Greater Baltimore Committee and The Chesapeake Planned Giving Council and serves on the Catholic Community Foundation Investment Committee and St. Margaret Finance Committee.
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