Regulating Investment Advice for 401(k) Plan Participants: Is More Advice the Answer?

NYU Review of Employee Benefits and Executive Compensation, Chapter 5, 2010

36 Pages Posted: 11 Feb 2011

See all articles by Kathryn L. Moore

Kathryn L. Moore

University of Kentucky College of Law

Date Written: February 8, 2011

Abstract

Today, most retirement plan participants are covered by a 401(k) plan that requires the plan participants to decide how to invest their plan assets. Yet plan participants are notoriously poor investors. Thus, there has been a trend toward providing plan participants first with investment education and now with investment advice. This Article discusses whether the provision of investment advice is likely to be successful. The Article begins by providing an overview of ERISA’s fiduciary rules as they apply to investment advice. It then discusses the types of investment support that were permissible under ERISA prior to the Pension Protection Act of 2006 (“PPA”). It then discusses the PPA statutory prohibited transaction and the proposed regulation implementing that exemption. Finally, it discusses whether the provision of investment advice pursuant to the statutory exemption is likely to benefit plan participants.

Keywords: investment advice, 401(k) plans, retirement savings

JEL Classification: J26

Suggested Citation

Moore, Kathryn L., Regulating Investment Advice for 401(k) Plan Participants: Is More Advice the Answer? (February 8, 2011). NYU Review of Employee Benefits and Executive Compensation, Chapter 5, 2010, Available at SSRN: https://ssrn.com/abstract=1757870

Kathryn L. Moore (Contact Author)

University of Kentucky College of Law ( email )

620 S. Limestone Street
Lexington, KY 40506-0048
United States
859-257-7637 (Phone)
859-323-1061 (Fax)

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