COLLECTED WISDOM™ on the DOL and SEC Fiduciary Rules

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

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Other topical areas you may find of interest include Fiduciary Responsibility and Liability Issues and Fiduciary Related News and Intelligence.

Proposed Changes to PTE 2020-02 that Impact Broker-Dealers

The DOL has proposed amendments to its regulation defining fiduciary advice so that, in most cases, a single recommendation to a retirement investor will be a fiduciary act. In addition, the DOL has proposed amendments to Prohibited Transaction Exemption 2020-02, which provides relief for prohibited conflicts of interest. This article focuses on the proposed amendments that will impact broker-dealers and their registered representatives.

Source: Brokerdealerlawblog.com, April 2024

DOL to Issue Final Fiduciary Rule on Tuesday

The DOL will announce its final fiduciary rule on Tuesday afternoon, according to the American Retirement Association. The ARA confirmed on Monday that acting Secretary of Labor Julie Su will announce the final regulation in a Treaty Room ceremony at 5 p.m. ET.

Source: 401kspecialistmag.com, April 2024

Viewpoint: The DOL's Hurried Fiduciary Rule Poses Lasting Harm to Investors

Elena Barone Chism, Deputy General Counsel, Retirement Policy, at ICI, writes, "Regrettably, the Department of Labor is rushing to finalize a fiduciary advice rule that threatens to roll back that progress. If implemented, the rule would lead to fewer choices in the marketplace and less access to financial advice and guidance -- losses that would fall heaviest on middle-class investors."

Source: Ici.org, April 2024

The Department of Labor's Fiduciary Proposals

The final rule has been approved by the OMB and may be publicly available as early as May 1. The changes significantly impact both financial professionals and the financial institutions they represent. However, the impact will be greatest on the distribution of annuities, and regulatory attention is particularly focused on fixed-indexed annuities.

Source: Faegredrinker.com, April 2024

Final Fiduciary Rule Coming Soon as OMB Completes Review

The White House Office of Management and Budget indicated on its website that as of Wednesday, April 10, it has concluded its review of the DOL's Retirement Security Rule. While it is unclear at this point exactly when the DOL will announce the final rule, when it does, the public will get its first look at any revisions made as a result of an enormous amount of feedback.

Source: 401kspecialistmag.com, April 2024

OMB Concludes Fiduciary Rule Review, DOL Release Expected Soon

The White House's Office of Management and Budget has completed its review of the Retirement Security Rule, and it is expected to be released by the Department of Labor by the end of the month, according to reliable sources. The OMB concluded its review and removed the rule from its regulatory review dashboard on April 10.

Source: Napa-net.org, April 2024

The New Fiduciary Rule: Changes to PTE 2020-02 Affecting Financial Institutions

The proposed regulation will cause many more people and firms to be fiduciaries when they make "investment" recommendations to retirement investors. This article by Fred Reish discusses the changes that affect financial institutions.

Source: Fredreish.com, April 2024

Gomez: DOL Fiduciary Rule Seeks to "Level the Playing Field"

The bottom line with the DOL's controversial fiduciary rule, currently under review at the White House Office of Management and Budget, is that it seeks to level the playing field to protect retirement investors. That's what Lisa Gomez, the DOL Assistant Secretary for EBSA, told attendees during the opening general session at the 2024 NAPA 401k Summit.

Source: 401kspecialistmag.com, April 2024

The New Fiduciary Rule: Changes to PTE 2020-02 Affecting the Advisor

The first, and current, version of Prohibited Transaction Exemption 2020-02 was effective in December 2020. In November of 2023, the DOL proposed amendments to PTE 2020-02 in connection with its proposed regulation expanding the definition of fiduciary advice to retirement investors, private sector retirement plans, participants in those plans, and IRA owners. This article discusses the proposed changes to PTE 2020-02 that will affect individual advisors and agents.

Source: Fredreish.com, April 2024

The New Fiduciary Rule: Robo Advice and Robo Conflicts

Under the current PTE 2020-02, the exemption relief is not extended to "pure" robo-advisers. Instead, only "hybrid" robo-advisers can provide non-discretionary fiduciary advice to retirement investors where the advice is conflicted. However, when the proposed amendments to the PTE become final and applicable, compensation resulting from conflicted nondiscretionary advice will be permitted if the conditions of the exemption are satisfied. This article discusses robo advice under PTE 2020-02.

Source: Fredreish.com, March 2024

Managing Fiduciary Conflicts in the Age of Convergence

In recent years, retirement plan advisers for Employee Retirement Security Act plans and advisers for wealth management clients have joined forces within the same firm. Among the many challenges involved with integrating these two practices is complying with the fiduciary and prohibited transactions of ERISA and section 4975 of the Internal Revenue Code when providing advisory services to clients. ERISA expert David Kaleda discusses what the DOL's proposed Retirement Security Rule may mean for retirement and wealth management firms.

Source: Planadviser.com, March 2024

The DOL Fiduciary Rule Requires a Recommendation. What Is That?

The DOL's proposed fiduciary regulation includes a new and expanded definition of when a representative of a broker-dealer, investment adviser, bank, or insurance company will become a fiduciary under ERISA and the Internal Revenue Code. The new definition starts with whether a "recommendation" has been made. This article discusses the definition of "recommendation."

Source: Fredreish.com, March 2024

Route to Success: Setting a Course of Action Prior to the DOL Fiduciary Rule 4.0

This is the presentation material from a program where Eversheds Sutherland attorneys Issa Hanna, Carol McClarnon, and Mark Smith provide practical steps to consider before the DOL's Fiduciary Rule proposal becomes final in the coming months.

Source: Eversheds-Sutherland.com, March 2024

The Fiduciary Rule: Effective Date and Lawsuits

In this podcast series of updates, Fred Reish and Brad Campbell offer a high-level view of current trends and recent ERISA developments. In this newest episode (about 23 minutes), they discuss The Fiduciary Rule: Effective Date and Lawsuits.

Source: Spotlightonbenefits.com, March 2024

Slide Deck From Presentation on the DOL's Fiduciary Rule: The Impact on Recommendations of Annuities

Faegre Drinker discusses the DOL's proposed fiduciary regulation and its amendments to Prohibited Transaction Exemptions 84-24 and 2020-02 and their anticipated impact on annuity sales. These proposed rules, to be finalized this year, will impose significant requirements on recommendations of annuities to retirement investors -- ERISA and tax-qualified private-sector retirement plans, participants and IRA owners -- including recommendations for rollovers and transfers.

Source: Faegredrinker.com, March 2024

DOL Sends Fiduciary Rule to Office of Management and Budget

The Office of Management and Budget (OMB) received the fiduciary rule, listed as Retirement Security Rule: Definition of an Investment Advice Fiduciary, from the DOL on March 8. The OMB will review its costs and benefits within 90 days. However, the compressed two-month period in which the DOL finalized the rule has industry watchers predicting that the OMB will also move quickly in its review.

Source: Asppa.org, March 2024

Expect a Stronger, More Lawsuit-Proof Fiduciary Rule Very Soon

The DOL continued its fast-track pace on its fiduciary rule, sending a final version to the White House last week that will likely be released in a matter of weeks. Lawyers who have been carefully reviewing the fiduciary rule say that it's not likely that the Department of Labor will change much from the contentious proposed version of the rule and its prohibited transaction exemptions. The department is racing ahead to make it difficult for Congress or a new president to undo the rule.

Source: Investmentnews.com, March 2024

Past is Prologue: DOL Proposes to Change the Definition of "Investment Advice"

On November 3, 2023, the DOL published in the Federal Register its proposed, Retirement Security Rule: Definition of an Investment Advice Fiduciary. In this article, Groom principal David Kaleda covers the DOL's 1975 fiduciary rule, changes made to the rule in 2016, and the changes proposed in 2023.

Source: Groom.com, March 2024

DOL Sends Final Fiduciary Rule to OMB

On March 8, 2024, the DOL sent a final version of the Retirement Security Rule: Definition of an Investment Advice Fiduciary to the Office of Management and Budget for review. OMB review is typically the final stage of the regulatory process before the publication of a final rule and can take anywhere from a few days to several months.

Source: Groom.com, March 2024

Investment Advice to Plans and Participants and Litigation Risks

While plan sponsors are generally the focus of litigation, retirement plan advisors can also be a target of lawsuits for breach of fiduciary duties under ERISA. There has been a recent increase in ERISA claims filed against retirement plan advisors and this article discusses the allegations and the court's conclusions in selected cases.

Source: Napa-net.org, March 2024

The New Fiduciary Rule: Can Wholesalers Become Fiduciaries?

It is well known that the expansive definition of fiduciary in the DOL's proposed regulation will cause many more advisors and insurance agents to be fiduciaries for their recommendations to retirement investors. However, it is less known that the same rules can apply to wholesalers of securities and insurance products.

Source: Fredreish.com, March 2024

Compensation Requirements under Proposed Amendments to PTE 2020-02

Broker-dealers and their registered representatives providing services to private sector tax-qualified and ERISA-governed retirement plans, participants in those plans, and IRA owners are subject to several compensation rules. ERISA's fiduciary responsibility rules mandate that ERISA plans pay no more than reasonable compensation to service providers (including advisors). This article focuses on the compensation limitations in the DOL's proposed amendments to PTE 2020-02.

Source: Brokerdealerlawblog.com, February 2024

Regulation Best Interest and Individual Retirement Accounts

The retirement security proposal, proposed by the DOL in October, would apply fiduciary duties under ERISA to rollovers to individual retirement accounts, among other transactions. Opponents of this proposal say that the SEC's Regulation Best Interest has been regulating these transactions since June 2020, and the DOL proposal is therefore unnecessary. This article reviews what Reg BI requires when it comes to rollovers.

Source: Planadviser.com, February 2024

Five Things to Consider About the Fiduciary Rule Redux

There is a long road from a fiduciary proposal to a rule in force. By now, the proposed new fiduciary rule has been read, digested, analyzed, and the subject of countless articles, webinars, and more. So, where do you go now as an advisor? Advisors may want to look at the new rule through this framework.

Source: Napa-net.org, February 2024

Smaller Accounts, Insurance Product Impact Debated at Hearing on Fiduciary Proposal

Opponents of the Department of Labor's retirement security proposal testified at a Congressional hearing Thursday that the proposal would dramatically decrease access to advice for smaller account holders, while proponents argued it is a necessary regulation to reduce and mitigate investor abuses.

Source: Planadviser.com, February 2024

House Lawmakers Debate Merits of DOL's Proposed Fiduciary Rule

Coming slightly more than a month after its first hearing on the Department of Labor's proposed investment advice fiduciary rule, a second subcommittee of the House of Representatives debated the merits of the proposal, with the battle lines drawn between the two parties. The DOL is currently reviewing the thousands of comment letters that were submitted to it earlier. The DOL's unified agenda does not show a target release date for a final rule.

Source: Asppa.org, February 2024

Retirement Security Proposal Addresses "Significant Gaps," EBSA Official Says

Tim Hauser says the DOL's retirement security proposal, sometimes called the fiduciary proposal, is not the same as the proposal made in 2016, as some critics have suggested. The latest iteration of the proposal has been the subject of widespread debate and controversy since it was first proposed in October. Hauser, the deputy assistant secretary for program operations of the DOL's Employee Benefits Security Administration, offered insight into why the Department of Labor continues to pursue it.

Source: Planadviser.com, February 2024

The DOL Fiduciary Proposal's Impact on Banks and Trust Departments

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. In this newest episode, they look at the DOL's fiduciary proposal's impact on banks and trust departments.

Source: Spotlightonbenefits.com, February 2024

The Fiduciary Rule's Foray Into Uncharted Territory

Generating over 19,000 written comments, the DOL's proposed fiduciary rule changes hit a "vein." Though the proposed changes are complex and multi-tiered, there are two of them that are particularly garnering most of the attention.

Source: Businessofbenefits.com, February 2024

Podcast - DOL Fiduciary Hearings and Comment Letters: Part 1

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this podcast, Fred and Brad offer a high-level view of current trends and recent ERISA developments primarily around the DOL fiduciary hearings and comment letters.

Source: Spotlightonbenefits.com, January 2024

Regulation May Impact Advisor-Intermediated Rollovers From DC Plans

Retirement plan advisors impart a high degree of influence over 401k participants' decisions related to IRA rollovers. However, as wealth management firms continue to pursue opportunities in ERISA-covered retirement plan space, they will need to navigate and overcome new and pending regulation imposing more stringent fiduciary requirements when recommending IRA rollovers, according to The Cerulli Edge -- U.S. Retirement Edition.

Source: Cerulli.com, January 2024

Fiduciary Rule May Curtail Wealth Managers Pursuing Retirement Planning

A new study by Cerulli Associates looks at how wealth managers must navigate the looming DOL fiduciary rule when recommending individual retirement account rollovers to defined contribution participants. As wealth management firms move into the retirement planning space, more will have to comply with ERISA, and thereby, the pending fiduciary rule proposed by the DOL in October.

Source: 401kspecialistmag.com, January 2024

Oxford Survey Finds DOL May Have Underestimated Compliance Cost of Fiduciary Proposal

A survey conducted by Oxford Economics estimated that the compliance costs associated with the DOL's fiduciary proposal could grossly exceed the estimates provided by the DOL. The survey, commissioned by the Financial Services Institute, estimated that $2.77 billion would be required to come into compliance with the proposal in the first year, whereas the DOL estimated first-year costs to be about $253 million.

Source: Planadviser.com, January 2024

Big Names Back Latest Proposed Fiduciary Rule

While many financial services firms and related trade groups have expressed their opposition, several high-profile firms have come out in support of the latest iteration of the DOL's proposed fiduciary rule. Aggregation firm HUB mirrored certain arguments made by the American Retirement Association in its comment letter supporting the rule (with suggested changes), specifically mentioning the current regulatory gap concerning one-time recommendations to plan sponsors that are not considered fiduciary advice.

Source: Asppa.org, January 2024

Loaded With Teeth and Better Crafted, the Latest 'DOL Rule' Attracts 19,000 Comments

ERISA lawyers are saying that we have the new DOL rule that does much the same as the old, but there's a big difference. The DOL learned its lessons about how to present its case and the language this time is tighter and more threatening to vested interests. That begins to explain how it generated 19,000 comments, including 134 pages from SIFMA, the chief force holding together a wildly huge if fading, coalition of banks, insurers, and brokerages that are determined to make 'suitability' a good enough standard. But it's running out of intellectual and even practical firepower and the battle over the DOL's rule shows that it's even losing ground to slow-footed government bureaucracies.

Source: Riabiz.com, January 2024

Fiduciary Rule: The Timeline for the Final Regulation and Exemptions

The DOL published its proposed fiduciary regulation and prohibited transaction exemptions in the Federal Register on November 3, 2023. That was the beginning of a process that will end with the final rules and their effective and applicability dates. This article is Fred Reish's best guess about the timing of the process to complete the DOL's work.

Source: Fredreish.com, January 2024

Congress Voicing Concerns With DOL Fiduciary Rule Proposal

Many in Congress are joining thousands of the more than 19,000 commenters in voicing concerns with the DOL's controversial proposed "Retirement Security Rule: Definition of an Investment Advice Fiduciary." Fifty bipartisan reps sent a letter urging that the controversial rule be withdrawn, and the House Capital Markets Subcommittee will hold a hearing Wednesday to explore its necessity.

Source: 401kspecialistmag.com, January 2024

Rollover Recommendations Will be Fiduciary Advice. And What About Withdrawals? Podcast

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. This new episode looks at rollover recommendations that will be fiduciary advice, but what about withdrawals?

Source: Spotlightonbenefits.com, January 2024

American Securities Association Says DOL Acting Secretary Cannot Finalize Fiduciary Proposal

The American Securities Association filed a comment letter with the DOL arguing that the fiduciary proposal, also known as the retirement security proposal, is unlawful for a variety of reasons. The letter does not speak directly to the merits of the proposal, but it is a possible preview of many of the legal arguments that will arise in litigation if the rule is finalized.

Source: Planadviser.com, January 2024

EBSA Rejects Requested Delay as Proposed Fiduciary Rule Moves Forward

The DOL's Employee Benefits Security Administration issued a letter rejecting a request for delays in the rulemaking process concerning the expansion of the definition of fiduciary under ERISA. The Securities Industry and Financial Markets Association, American Retirement Association, and various other financial groups previously sent a joint letter to EBSA, requesting that the agency extend the comment period and delay the public hearing regarding the proposed fiduciary rule.

Source: Hallbenefitslaw.com, January 2024

ARA Submits Comment Letter to DOL on Proposed Fiduciary Rule

In their comment letter submitted to the Department of Labor on Jan. 2, 2024, the American Retirement Association expressed support for the department's proposed definition of "fiduciary invest. Advice" and amendments to PTE 2020-02. In the letter, they also shared several specific concerns and recommended revisions.

Source: Asppa.org, January 2024

The Proposed DOL Fiduciary Rule: Significant Changes for Advisers

The DOL's recently issued proposed rule would expand the definition of fiduciary advice to cover many services provided by advisers to retirement plans and IRAs. Under this expanded definition, advisers may need the relief provided by Prohibited Transaction Exemption 2020-02 to avoid a prohibited transaction. The DOL has also proposed amendments to PTE 2020-02. This article describes the proposed fiduciary advice rule and the proposed amendments to PTE 2020-02 and discusses the impact these proposals, if finalized, will have on advisers.

Source: Fredreish.com, December 2023

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