Pension Protection Act of 2006, which President Bush signed into law yesterday, allows Series 7-holders to provide advice to 401(k) plan participants and directs the Secretary of Labor to issue a class exemption for advice provided to IRA holders. (Click here to read more on the bill.)
Marc Lackritz, SIA president, said, “With the nation’s personal savings rate on life support, this pension reform bill provides a needed and welcome booster shot for baby boomers and everyone else preparing for retirement.” (Click here to read the SIA’s full press release.)
The new law includes a number of other adjustments affecting retirement accounts, including eight ERISA modernization provisions. For instance, it authorizes collective funds—which combine tax-exempt assets of various individuals and organizations in order to create a well-diversified portfolio—to accept additional assets from private pension plans. To read the actual text of the Pension Protection Act or the specific provision relating to investment advice, click here. For a summary of the rules and regulations contained in the investment-advice provision of the bill and how they affect reps, click here.
Erik Brechnitz, an advisor with Raymond James & Associates in Decatur, Ill., says, “This is great news for both the advisor and the investor.” He says prior to this law, his firm could only show clients what their options were with their 401(k) plans. “The only thing we could do was show them the aggressive, moderate and conservative models. Now we can tell them specifically what is appropriate for them,” he adds.