Department of Labor Finalizes Fiduciary Rule
David M. Pixley

Today, the DOL released the much anticipated fiduciary rule. The final regulations create a new playing field for certain investment professionals, which were previously not governed by ERISA’s fiduciary standards and rules governing prohibited transactions.

Citing a need to create better safeguards and protect retirement plans and individual investors, the DOL replaced the 1975 regulations with a new definition of fiduciary investment advice. Under the final rule, individuals providing certain types of advice in exchange for a fee or compensation will be subject to the new conflict of interest/fiduciary duty rule. The final regulations define the types of advice covered by the new rule as well as the relationships and communications that will constitute fiduciary investment advice.

Also, the DOL created new exemptions to what would otherwise be considered prohibited transactions, including the “Best Interest Contract Exemption” and the “Exemption for Principal Transactions.” The DOL also amended and expanded some existing prohibited transaction exemptions.

These new regulations will substantially change the investment advisory industry. In light of the anticipated impact on the industry, the final regulations provide for a one year implementation period, rather the eight month period contained in the 2015 proposed rule.

We will be reviewing and analyzing the DOL’s final rule and will be providing additional analysis of the new regulations. See the DOL Fact Sheet for more information.

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