## The Impact of the New U.S. Labor Department Rule on Rollover Advice
As financial experts, we at Extreme Investor Network are dedicated to providing you with the most up-to-date and valuable information to help you navigate the world of personal finance. Recently, a new U.S. Labor Department rule has been issued that will significantly change the advice many investors receive about rolling money over from 401(k) plans to individual retirement accounts (IRAs). This rule, known as the “fiduciary” rule, aims to raise the legal bar for brokers, financial advisors, insurance agents, and others who give retirement investment advice.
### Millions of Investors Roll Over Funds Each Year
Rollovers are common, especially for retiring investors, and involve moving one’s nest egg from a 401(k)-type plan to an IRA. In 2022, Americans rolled over about $779 billion from workplace retirement plans to IRAs, with almost 5.7 million people rolling over money to an IRA in 2020 alone. The number and value of these transactions have increased significantly as more baby boomers enter their retirement years.
### A ‘Major Shift’ in Rollover Advice
Under the new Labor Department rule, investment recommendations are expected to be more “fiduciary” in nature. A fiduciary is a legal designation that requires financial professionals to put the client’s interests first and charge reasonable fees. Many rollover recommendations currently do not adhere to a fiduciary standard, exposing investors to conflicts of interest. However, this new rule changes that landscape.
### Why Rollover Advice May Be ‘Higher-Quality’
Advisors will now be expected to consider factors such as alternatives to a rollover, fees and expenses of a workplace plan vs. an IRA, and provide disclosures to investors prior to the rollover. The goal is to encourage higher-quality advice that benefits the client. While some financial companies dispute the necessity of the rule, experts believe it will ultimately lead to better outcomes for investors in terms of both investment quality and costs.
In conclusion, the new U.S. Labor Department rule represents a significant shift in how rollover advice is given, with the goal of improving the quality of advice provided to investors. At Extreme Investor Network, we are committed to keeping you informed and empowered to make the best financial decisions for your future. Stay tuned for more expert insights and advice on personal finance and investing.
