Employees who have seen their 401(k) balances dwindle over the last year will soon be able to get long prohibited individual investment advice from investment companies including mutual funds as a result of a new rule from the Department of Labor (DOL).

The rule, which lifts the restriction prohibiting mutual fund companies from giving one-on-one advice directly to plan participants, is controversial because of concerns that investment advisers might direct participants to their company's investment options. But several protections were built into the change, which comes under the umbrella of the Employee Retirement Income Security Act (ERISA). One of the ways investment advice may be given under the rule is via computer models certified as unbiased and through adviser compensation on a "level-fee" basis. And, of course, advisers are required to provide disclosure of the fees they charge.

The small risk of abuses aside, easing the rule on direct investment advice should work to the benefit of plan participants. Many studies have shown that 401(k) investors who receive some type of help with selecting their investments enjoy higher rates of return than those who go it alone -- whether it's via asset allocation models, target-date funds, or advisory services. According to a Charles Schwab report, the upside is particularly pronounced among younger employees, where the benefits of advice and getting off to a good start with their plan can have a significant impact on total retirement savings.

Ongoing market volatility and the economic crisis that continue to put soaring numbers of workers in unemployment lines every month underscore the need for sound investment advice for those fortunate enough to still have a job. Although the future of 401(k)s as workers' primary retirement savings vehicle is under examination by Congress, plan sponsors should be working with providers to determine how the new rule can benefit participants.