At issue here is the Department of Labor’s newly propogated regulation entitled “Definition of the Term ‘‘Fiduciary’’; Conflict of Interest Rule—Retirement Investment Advice,” 81 Fed. Reg. 20946.
At the National Law Review, Scott A. Cammarn and other authors observe that this rule expanded the term “fiduciary” to include “plans and individual retirement accounts under the Employee Income Retirement Security Act of 1974 and Section 4975 of the Internal Revenue Code of 1986 in connection with the provision of investment advice.”
As context, most financial advisors are already required to give this care and consideration to their clients, but the field of advisors to which this duty of care applied was narrowed by a Labor regulation in 1975. As explained in 81 Fed. Reg. 20946, if an advisor did not fit under this 1975 “five-part test” analysis, then that person could have conflicts of interests, give disloyal advice, steer consumers to invest based on their own interests, and have limited liability from any harms resulting from the advice given. One of the categories that fell through the gap was retirement planning – and the April 2016 rule closed it. Continue reading “Trump signed Pres. memo, “Fiduciary Duty Rule””