Tim Beauregard Annuity Sales Manager

The U.S. Department of Labor (the DOL) announced a new three-part fiduciary rule package on June 29,2020 governing investment advice replacing the 2016 Obama administration rule vacated in 2018.

Under the new package the DOL immediately reinstates their five-part test to determine whether a person is a fiduciary when providing investment advice, including when delivering advice on a regular basis. The rule package also provides explanation of the DOL’s interpretation of the five-part test and states that advice to rollover retirement plan distributions to an IRA could be considered fiduciary investment advice.

A third proposed rule provides exemptions allowing fiduciaries to receive compensation that would otherwise be prohibited as long as fiduciaries act in a retirement savers best interest and follow impartial conduct standards including: a best interest standard, a reasonable compensation standard, and the fiduciary not make any materially misleading statements.

The proposed rule package applies to registered investment advisers, broker-dealers, banks, insurance companies and their employees, agents, and representatives. However, brokers who adhere to Regulation Best Interest will likely be deemed as being in compliance with the new DOL rule package

Comments to this proposal are due by August 6th, 2020 after having been published in the Federal Register on July 7th, 2020. If the rule is granted, the proposed exemption would be effective 60 days after the final version is published in the Federal Register.