Big Banks Rethink Legal Route to 401(k) Management With New Rule

The US Labor Department’s newly amended exemption to federal benefits law allowing asset managers to oversee workplace retirement funds imposes stricter disclosure and recordkeeping requirements that will prompt some Wall Street firms to weigh alternatives.

Retirement savers’ money in employer-sponsored plans has long been entrusted to asset managers who operate under the class exemption, which as of Monday carries higher net-worth and assets-under-management conditions and calls for all companies to amend their contracts with plans.

The updated qualified professional asset manager (QPAM) prohibited transaction exemption standards, now in effect, also make it harder for institutions that have faced foreign criminal ...