Last week, the Department of Labor issued for public comment its rule to amend the definition of "fiduciary" under the Employee Retirement Income Security Act. The comment period is open for 75 days, followed by a public hearing and publication of the transcript followed by another opportunity to comment. The rule includes a proposed rule that would update and close loopholes in a nearly 40-year-old regulation. The proposal would expand the number of persons who are subject to fiduciary best interest standards when they provide retirement investment advice. It also includes a package of proposed exemptions allowing advisers to continue to receive payments that could create conflicts of interest if the conditions of the exemption are met. In addition, the announcement includes a comprehensive economic analysis of the proposals' expected gains to investors and costs.
Under the proposals, retirement advisers will be required to put their clients' best interests before their own profits. Those who wish to receive payments from companies selling products they recommend and forms of compensation that create conflicts of interest will need to rely on one of several proposed prohibited transaction exemptions.
ABIA will be issuing a comment letter responding to the Department of Labor Rule. If you have any questions or comments, please contact Sarah Ferman.
Read the proposed rule.