DOL Fiduciary Rule
The roller coaster ride that was the Department of Labor’s fiduciary rule made headlines several times during 2024. The introduction of the Retirement Security Rule aimed to update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA). It sought to ensure that financial professionals act in the best interests of retirement investors, providing prudent and loyal advice while avoiding conflicts of interest. The rule was scheduled to take effect on Sept. 23, 2024, with certain conditions in the prohibited transaction exemptions (PTEs) having a one-year transition period.
However, the rule faced significant legal challenges. In July 2024, a U.S. judge blocked the DOL’s new Retirement Security Rule from taking effect, ruling that it was arbitrary and conflicted with ERISA. The judge issued a nationwide injunction, preventing the rule from being implemented while the lawsuit proceeded. The insurance industry also mounted a legal offensive against the rule, arguing that it would limit consumer choice and deprive many of necessary advice. In August 2024, reports indicated that the industry’s efforts were succeeding in hindering the implementation of the new protections for retirement savers.
The January 2025 return of Donald Trump to the White House introduces additional uncertainty regarding the future of the fiduciary rule. The Trump administration has previously expressed opposition to such regulations, favoring less stringent oversight of financial advisors. It is anticipated that the new administration will take steps to further delay, modify, or potentially rescind the rule altogether.
• DOL Final Fiduciary Rule Released, Set to Become Effective in September
• Texas Judge Puts DOL Fiduciary Rule on Ice
• DOL Fiduciary Rule Hit with First Lawsuit
• Fiduciary Rule Reaction: For and Against
• DOL Fiduciary Rule, ESG Considerations Likely DOA Under Second Trump Term
