New Fiduciary Rule Arrives at White House

Kathryn Mayer By Kathryn Mayer September 14, 2023

​A new fiduciary rule proposal from the Department of Labor, which would redefine the kinds of financial advice subject to fiduciary standards under workplace retirement plan laws, has arrived at the White House and is awaiting review.

The rule would redefine fiduciary investment advice under the Employee Retirement Income Security Act (ERISA). The rule arrived late on Sept. 8 to the Office of Information and Regulatory Affairs within the White House's Office of Management and Budget.

The review can take anywhere between 30 and 90 days.

The text of the proposal is not yet available, although the DOL said the proposal is designed to "more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries."

SHRM Online gathered up additional news on the topic.

A Potential Big Change

Jason Berkowitz, chief legal and regulatory affairs officer at the Insured Retirement Institute, said it appears that the DOL is looking to "bring more financial professionals under the fiduciary status of ERISA."

(Plan Sponsor)

Previous Attempts to Update Law

It's the first attempt in years to amend the rule.

The DOL's work on fiduciary investment advice spans multiple administrations. In 2016, under the Obama administration, the department finalized a rule that broadened the definition of a person or entity taking on fiduciary responsibilities and replaced a five-part test used to determine whether an investment professional or financial institution serves as a fiduciary.

The rule was stuck down in federal court in 2018 following a challenge from industry groups led by the U.S. Chamber of Commerce.

Under the five-part test, an advisor has to: 1) provide investment advice to a plan; 2) on a regular basis; 3) pursuant to an agreement; 4) that is the primary basis for investment decisions; and 5) whose advice is individualized to the plan.

(Pensions & Investments)

Some Backlash

Although proponents of updated fiduciary standards say it is the best way to protect retirement plan participants, the proposed rule is not without its controversies. Many industry groups representing retirement plan sponsors and financial professionals are adamantly against it.

"By pushing forward with this proposal, DOL is choosing a path that we know will harm the consumers they seek to help when they can and should instead allow the current rules to work without depriving millions of retirement savers of access to their choice of financial professionals and products," Insured Retirement Institute President and CEO Wayne Chopus said in a statement after OIRA received the proposed rule.

(Bloomberg Law)



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