Labor Secretary Tom Perez and Sen. Elizabeth Warren (D – MA) will formally reveal the Department of Labor’s final fiduciary rule Wednesday morning, but the White House released its major provisions in the overnight hours.
They include a lengthy description of the best interest contract (BIC) exemptions and exclude education from the definition of investment advice.
Additionally:
Advisors receiving compensation for making investment recommendations that are individualized or specifically directed to a particular plan sponsor running a retirement plan, plan participant, or IRA owner is a fiduciary.
This change expands protections to IRA owners and people rolling over their savings into an IRA from a 401(k), who now must receive investment advice in their best interest.
Participant education is not included in the definition of retirement investment advice so advisors and plan sponsors can continue to provide general education on retirement saving without triggering fiduciary duties.
The rule streamlines and simplifies BIC required disclosure and eliminates BIC data retention requirements.
The rule explains how small businesses that sponsor 401(k) plans should be treated.
The rule allows the sale of proprietary products.
The rule will be implemented in a “phased approach” to accommodate advisors and firm, with full implementation required by Jan. 1, 2018.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
