Redefinition and Expansion of “Investment Advice”

On October 31, the Department of Labor (DOL) released a proposed rule that redefines and expands the regulatory definition of “investment advice” and the related fiduciary responsibility under the Employee Retirement Income Security Act of 1974 (ERISA).

Intended to close loopholes and better position employees to receive retirement advice, some argue that ambiguity around employer plan fiduciaries could mean significant new obligations without additional clarification.

And so begins the 60-day comment period reminiscent in many ways to the DOL’s 2016 revision attempt, which was repealed by the Fifth Circuit in 2018.

The timing implies a public hearing at the 45-day mark would fall just before Christmas and the deadline for submission of comments just after New Year's. Accordingly, industry groups are expected to file for a time extension as early as next week…

And so begins another round of the long-running showdown to amend the 1975 five-part test that currently defines a financial advice fiduciary. Since Barack Obama’s initial proposal in 2010, which was withdrawn for revision after public criticism, we have seen a regular reappearance of best interest, suitability, and fiduciary definition topics.

Whether this latest proposal will be the final chapter on the topic remains to be seen.

Christy Charise, Founder & CEO of Strategic Advisor www.strategicadvisor.co Facebook Instagram