Financial advice: The need-to-know as policymakers debate rule changes.

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  • Retirement savers should ask questions of professionals who help them make critical financial decisions.
  • Knowing the benefits financial professionals may receive can be essential in helping you figure out whose investment advice you should trust and follow. Fee-only advisors don’t receive commissions for products. They may receive a percentage of assets managed, a flat fee or hourly payment.

Retirement savers may soon face changes to the rules governing financial advice as policymakers debate the issue. Currently, the guidance investors receive from a financial professional or firm about handling old 401(k)s has been exempt from investment advice rules, and there are different standards for financial advice. The Biden administration wants investment advice given when making retirement decisions to come from a fiduciary, meaning the advice must be in the client’s best interest. However, some in the financial industry have pushed back against this proposed rule, arguing that it would create a regulatory burden and exclude millions of Americans from receiving guidance from commission-based financial professionals.

As the debate continues, retirement savers are advised to keep asking questions of professionals who help them make critical financial decisions, such as what to do with money in a 401(k) or 403(b) account after leaving an employer. Tips for retirement savers include:

  • Review investment options and fees: It’s essential to review and understand investment options, as well as the associated fees. Sometimes brokers from plan administrators may not consider personal circumstances or consider other retirement assets. Investment funds in 401(k) plans can be less costly than their IRA counterparts.
  • Know how the advisor is compensated: Asking how the financial professional is paid can help determine whose advice to trust and follow. Some advisors receive compensation from commissions, while fee-only advisors only make money from direct fees from clients.
  • Find fiduciary financial advisors, and vet them: Using search features from organizations such as the National Association of Personal Financial Advisors and the CFP Board can help identify potential financial professionals. The Securities and Exchange Commission also provides tools to find registered investment advisors and information about their experience and any consumer complaints.

Overall, it is crucial for retirement savers to stay informed and ask questions to ensure they receive the best financial advice for their individual circumstances.

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