Regulatory Outlook | 06.30.20
DOL Proposes New Standard to Replace Vacated Fiduciary Rule
The U.S. Department of Labor (DOL) announced it is proposing a new fiduciary rule to replace a rule that was vacated more than two years ago by a federal appeals court. The rule would provide exemptions under ERISA that would allow fiduciaries to receive compensation for advice that would otherwise be prohibited, such as third party payments, as long as they act in a retirement savers' best interests. Financial advisors would qualify for the exemption when working with 401(k) plans and IRAs if they follow impartial conduct standards, including: earning reasonable compensation, not making misleading statements, and telling customers they are acting as fiduciaries. The rule also reinstates the five-part test under ERISA to determine who is a fiduciary, which was replaced by the former standard. Brokers who adhere to the SEC's Regulation Best Interest, implemented June 30, will likely be deemed as being in compliance with the new DOL rule.
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