DOL Finalizes Fiduciary Rule

Yesterday, the U.S. Department of Labor (DOL) released a new fiduciary regulation that tightens conflict of interest rules under the Employee Retirement Income Security Act (ERISA). The rule is slated to begin taking effect early next year, but does not go into full effect until 2018.

The new regulation requires any person who provides guidance to clients about some retirement investments to adhere to a fiduciary standard of care. The rule primarily impacts IRAs, though it will also impact many 401(k) retirement plans. Moving forward, those who provide investment advice must either avoid compensation arrangements that create conflicts of interest or comply with the terms of an exemption the DOL issues.

Since the DOL first proposed the rule in April 2015, the Big “I” and others voiced concerns that the rule’s overly broad and complex requirements could lead to investor harm and limit consumer access to professional advice. While the DOL made some changes to the final rule based on these concerns, the rule’s wide range of requirements will still increase oversight costs and legal exposure for independent agencies and insurance companies that offer ERISA-covered retirement products. The increased costs and exposure will likely limit access to advice for consumers who need it the most: mid- and low-income consumers with small balance retirement accounts.

The Big “I” supports numerous legislative measures that seek to address concerns about the rule. In February, two companion measures that would require Congress to approve the DOL rule passed out of committee in the U.S. House of Representatives, but have not yet seen a floor vote. Additionally, at least five other related bills are pending in the House and the U.S. Senate. The Big “I” will discuss the implications of the new DOL rule and potential congressional action during next week’s Legislative Conference.

More information about the rule is available on the DOL’s website. Big “I” staff will continue reviewing the rule, which exceeds 1,000 pages, and its implications for independent agents. For additional articles and updates, keep an eye on upcoming editions of the News & Views e-newsletter.

Jennifer Webb is Big “I” federal government affairs counsel.