DOL’s new fiduciary rule is out
The Department of Labor’s new fiduciary rule today is out, an overhaul of a 1975 regulation that the insurance industry has fought tooth and nail, as it will for the first time subject many agents selling annuities to the Employee Retirement Income Security Act.
Despite strong industry pushback and opposition by Republicans in Congress, opponents of the proposed update to the definition of investment advice will almost certainly be disappointed, as the DOL generally only made clarifications rather than substantive changes.
“There’s nothing in these clarifications or changes that anyone should interpret as a watering down or real change in position from the proposal,” said Lisa Gomez, assistant secretary for the Employee Benefits Security Administration, in a call Tuesday with reporters before the text of the final rule was available.
New rule
The new rule and its accompanying prohibited transaction exemptions address investment advice made to retirement savers. Financial professionals who hold themselves out as providing individualized, reliable recommendations will be held as fiduciaries, and will have to give “prudent, loyal, honest advice free from overcharges,” according to the DOL. Financial institutions that oversee advisors will have to have policies to address conflicts of interest and will be responsible for compliance.
The new rule takes effect September 23, although many provisions will not be enforceable until April 2025. Starting in September, brokers relying on prohibited transaction exemptions will have to abide by impartial conduct standards and acknowledge their fiduciary status, according to the DOL. That means an obligation to be prudent and loyal, said Ali Khawar, principal deputy assistant
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