Investment Advice: Does Opportunity Outweigh Risk For Financial Professionals?

Business growth opportunity or potential liability? That question may be on the minds of many financial professionals now that the Pension Protection Act has opened the door for them to provide investment advice to defined contribution plan participants. A new white paper from the Principal Financial Group®, Pension Protection Act of 2006: Is An Expanded Fiduciary Role The Right Choice For Financial Professionals?, can help financial professionals understand the new investment advisory role and determine if it is right for them. "The Principal understands that while taking on an expanded investment advisory role can help financial professionals grow their business, it also adds potential liabilities and administrative complexity to their job because providing investment advice is a fiduciary act,” says Dennis Long, vice president, Retirement and Investor Services, The Principal®. "This white paper can help financial professionals examine the pros and cons of this new opportunity. We are pleased to offer it as part of our ongoing commitment to help financial professionals excel at meeting the needs of their clients.” The white paper has received a third party endorsement from Debra Davis and Fred Reish—attorneys specializing in employee benefits law at the firm of Reish Luftman Reicher & Cohen. The experts reviewed the white paper for legal accuracy and its practical application to the daily work of financial professionals. "Regrettably, the new rules are complex and, in some cases, difficult to implement,” explains Reish, managing director and partner as well as a nationally recognized expert on employee benefits law, and author of several books and articles on pension issues. "This white paper highlights many of the issues financial professionals should consider when deciding whether to offer investment advice to participants. It presents an easy-to-understand, yet technically correct, overview of the Pension Protection Act changes and the Department of Labor guidance.” Long says the white paper is part of a comprehensive educational program The Principal offers to help financial professionals and their clients understand and implement the many changes mandated by the historic Pension Protection Act. Pension Protection Act of 2006: Is An Expanded Fiduciary Role The Right Choice For Financial Professionals? examines key issues surrounding the fiduciary role, such as: Consumers’ growing need for investment advice The newly created role of the fiduciary adviser and duties of a fiduciary Compensation and fee guidelines Disclosure and audit requirements Requirements related to the use of computer modeling in providing investment advice Implications of defensive strategies (aimed at protecting the adviser from liability) and offensive strategies (geared toward expanding business) In addition to the white paper, The Principal has created an easy-to-use Pension Protection Act Guide and a number of issue papers that provide insight into specific topics in the new law, such as automatic enrollment. These resources are available to financial professionals at http://www.principal.com/retirement/biz/ppa.htm. About the Principal Financial Group The Principal Financial Group® (The Principal ®)1 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $282.1 billion in assets under management2 and serves some 18.1 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com. 1 "The Principal Financial Group" and "The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group. 2 As of June 30, 2007