The U.S. Department of Labor (DOL) has published in the Federal Register its final rule that will allow agents to provide computerized investment advice to 401(k) beneficiaries on two conditions.  The first is that the computer model must be certified as unbiased by an independent expert.  The second is that the fees paid to the agent do not vary based on the investment selected.

The rule goes into effect on Dec. 27, 2011 and amends the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code to provide an exemption to a previously prohibited transaction.  The purpose of the amendment is to improve participant access to fiduciary investment advice while preserving certain safeguards and conditions that would prevent investment advisors from providing biased advice or advice not in a participant’s best interest.

Other restrictions including disclosure of the adviser’s fees and an annual audit of the arrangement for compliance with the regulation are also mandated.  However, the rule does not affect DOL’s proposed rule on the definition of fiduciary investment advice which will be re-proposed.