10.31.23

DOL Publishes New Advisor Fiduciary Rule for Public Comment

by: Paul Mulholland

The U.S. Department of Labor published a proposal that will redefine when retirement advice triggers fiduciary status under the Employee Retirement Income Security Act of 1974. The proposal would scrap the traditional five-part test for determining if an advisor is acting in a fiduciary capacity and replace it with a three-part test in which satisfying any one of the three conditions would make the advisor a fiduciary. The first two criteria in the proposal say that if the advisor either invests money with discretionary authority or claims to be acting in a fiduciary capacity, the advisor is a fiduciary. According to the third criterion, if an advisor renders paid advice “to investors on a regular basis as part of their business and the recommendation is provided under circumstances indicating that the recommendation is based on the particular needs or individual circumstances of the retirement investor and may be relied upon by the retirement investor as a basis for investment decisions that are in the retirement investor’s best interest,” that advisor is a fiduciary.

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