Regulation

The Department of Labor’s new rule that would permit advisers affiliated with fund companies administering a 401(k) plan to give advice, is drawing fire—so much so that industry observers don’t expect it to last.The rule would permit an adviser to give advice if they either use a computer model that suggests appropriate investments given a person’s age and risk tolerance, or a flat-fee structure whereby they would not stand to benefit more for suggesting one fund over another.In passing the new rule, the DOL said, “Access to professional investment advice is particularly important now for workers as they manage their 401(k) plans and IRAs in changing and volatile financial markets.”One critic, however, is Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, who recently testified that the law is flawed because “it will allow financial services firms to offer potentially conflicted investment advise on workers’ retirement accounts.”Financial planner Chad Griffeth agreed, telling Dow Jones, “The rule does not prevent potential for conflicted advice.“The controversy exists in that the person delivering the advice must adhere to specific fiduciary criteria, but their affiliated firm, whether that’s a broker/dealer, mutual fund company, insurance company or bank, does not,” Griffeth said. “[This] opens the door on the part of brokerage firms and mutual fund firms at the sake of participants, whom I fear wouldn’t know what questions they should ask to ferret out conflicted advice.”

Fair value reporting seemed anything but fair last October when prices fell off a cliff.

The Department of Labor has ruled that financial advisers affiliated with the mutual fund companies administering 401(k) plans can offer advice. However, they must reveal the source of their fees, which will remain constant, regardless of their recommendations. If they use computer models, they must also disclose that.

The events that occurred in the financial services industry over the past year were once thought inconceivable. At this point, regulators are chomping at the bit to reverse how Wall Street does business, and investors are downright spooked. The editors of SourceMedia's business publications offer their views on how these dramatic shifts on Wall Street and in corporate America will impact businesses and investors this year.

NEW YORK - The whole world will be in a recession throughout 2009, economists say, but it will be the U.S. and its strong dollar that lead the world to recovery sometime in 2010.

Millionaires and affluent investors suffered steep losses in 2008, and most, particularly Baby Boomers, are rolling their remaining assets into cash and stable-value investments for the foreseeable future.

President-elect Barack Obama's transition team is working closely with House Financial Services Chairman Barney Frank and other lawmakers to make sure that municipal debt is included in the federal government's economic recovery programs.

Massachusetts Secretary of the Commonwealth William Francis Galvin filed an administrative proceeding Tuesday against Reserve Funds and its founder Bruce Bent, accusing them of lying to investors about the dire straights of their investments in Lehman Brothers.

Variable annuity sales sank in 2008 as the stock market's swoon scared investors off.

The Federal Reserve has allowed more companies to take part in its program to add more liquidity to money market mutual funds.