Fiduciary Responsibility


Update on the status of the fiduciary rule: Department of Labor will finalize new regulations that delay the full implementation of its new fiduciary rule. The fiduciary rule went into effect on June 9, 2017, and includes a transition period to phase in some of the rule’s effects. Under the new final regulations, this transition period – originally scheduled to end on January 1, 2018 – will instead end 18 months later, on July 1, 2019. The delay affects the Best Interest Contract Exemption (“BIC Exemption”), the Principal Transactions Exemption and certain amendments to the Prohibited Transaction Exemption 84-24. (You can read about the delayed rules here.)

The BIC Exemption in particular has been controversial, and the delay in implementation will likely be a relief to advisers. Under the exemption, in order to receive variable compensation advisers and institutions must, among other things, implement and disclose to retirement investors specific procedures to mitigate possible conflicts of interest, make more complete disclosures of compensation and fee information, and develop and enter into contracts with IRA investors. Advisers, financial institutions, and plans have until July 2019 to put all this into place.

Keep in mind, however, that advisers must still operate under the DOL’s “Impartial Conduct Standards,” which require that advisers provide advice in the investor’s best interest, receive no more than “reasonable” compensation, and make no materially misleading statements. 


Our Guidance

Investments Must Be Monitored Regularly. Can a statute of limitations protect you against claims you’ve breached your fiduciary duty by selecting a high cost or otherwise unsuitable investment years ago? The answer may be no. Read more here