DoL Proposal Imposes Fiduciary Standard on Retirement Advisers
The Department of Labor has proposed new rules that impose a fiduciary standard on any individual receiving compensation for providing investment advice to plan sponsors, plan participants, or IRA owners. The fiduciary standard, which requires providing “impartial advice in [the] client’s best interest,” would apply to RIAs, brokers, insurance agents, or any other type of adviser. The DoL excludes providing general education and order-taking. Firms can accept any type of compensation including commissions so long as they put their clients’ interest ahead of their own and ensure full disclosure. Firms must enter into an agreement specifying that they will act as a fiduciary and implement policies and procedures to mitigate conflicts of interest. The rules include a private right of action for clients as well as DoL enforcement authority. The DoL has commenced a 75-day comment period.
OUR TAKE: The DoL has beaten the SEC to the fiduciary punch. We fully expect that the SEC will push through a general fiduciary rule for all financial advice professionals including brokers.