Thursday, April 7th, 2016

Yesterday, the Department of Labor issued a long-awaited rule that amends the definition of “fiduciary” under ERISA.  The DOL’s new rule will hold any person providing investment advice to retirement accounts to the highest standard of care, requiring them to put their retirement investor clients’ interests before their own profits.  The new rule will require those providing investment advice to retirement investors, including brokers and insurance agents, to re-examine how conflicts of interest are addressed and disclosed.

While registered investment advisers are already held to a fiduciary standard, the amendment will still require additional compliance efforts on their part, including revising agreements with retirement investors to comply with the Best Interest Contract Exemption.

The new rule takes effect in April 2017 (one year after the final rule is published in the Federal Register).  Following a phased implementation period, full compliance with the exemptions, including the Best Interest Contract Exemption, will be required as of January 1, 2018.  While it is too soon to know exactly how the new rule will play out in practice, we will continue to study the extensive release and keep you up to date.  In the meantime, please do not hesitate to reach out to us with any questions or concerns.