DOL Releases Final Investment Advice Fiduciary Rule

On April 23, the Department of Labor (DOL) released a new set of rules for fiduciary investment advice titled, the “Retirement Security Rule.” The new rule is another attempt at an overhaul of a 1975 rule that defines who qualifies as an investment-advice fiduciary. The new rule has four broad components:

• Redefines who is a fiduciary;
• Establishes exemptive relief for eligible investment advice fiduciaries;
• Amends provisions impacting the sale of insurance and annuities products to ERISA plans and IRAs; and
• Eliminates certain existing exemptions for investment advice fiduciaries.

The rule does not outlaw commissions on sales, but it does make it more difficult for financial professionals to rely on exemptions that allow this form of compensation. Additionally, financial institutions that oversee advisors will be required to have policies to address conflicts of interest and will be responsible for compliance. Assistant Secretary for Employee Benefits Security Lisa M. Gomez stated, “The investment landscape has changed, the retirement landscape has changed, and it is critical that our regulations are responsive to those changes so that workers can reach the secure retirement that they work for decades to finally achieve.” The new rule takes effect September 23, although many provisions will not be enforceable until April 2025.

Click here to read the DOL’s final rule.
Click here to read a press release covering the new rule.