The DOL’s new fiduciary rule is scheduled to become effective in September, and retirement plan advisors and plan sponsors have plenty to do to prepare for the changes it will bring.
Sponsored by
Jerry Schlichter, founding and managing partner of Schlichter Bogard LLC and a well-known pioneer of retirement plan excessive fee litigation, visits the 401(k) Specialist Podcast to share some important insights on the upcoming changes, legal challenges and what advisors need to be doing to prepare for compliance.
Key Insights Include:
- Uncertainty Surrounding the DOL Fiduciary Rule: The Department of Labor’s (DOL) new fiduciary rule is scheduled to become effective in September, but it faces significant legal challenges. Lawsuits from the Federation of Americans for Consumer Choice and various insurance trade groups argue the rule is arbitrary, capricious, and unconstitutional, mirroring concerns from the 2016 rule which was vacated by the courts.
- Key Changes and Implications: If implemented, the rule broadens the definition of who is considered an advisor, encompassing those giving advice on a wide range of retirement assets, including IRAs and annuities. Notably, it includes insurance agents under ERISA’s high standards for the first time. Advisors and plan sponsors must ensure advice is in the best interest of participants, necessitating thorough preparation, including developing detailed investor profiles and providing comprehensive disclosures and explanations.
- Plan Sponsor Responsibilities: Plan sponsors must be cautious to differentiate between education and advice, ensuring educational resources do not inadvertently become recommendations. Additionally, the use of participant information by recordkeepers for selling products outside the plan is seen as a fiduciary breach, a point of ongoing litigation, emphasizing the need for strict adherence to fiduciary duties and standards.
SEE ALSO: