OUR THOUGHTS ON:

New Fiduciary Rule Not Likely Until Spring

ERISA

By Todd Lucas

Investment experts say not to expect the Department of Labor's (DOL) rule on expanding the definition of a fiduciary any time before next spring. The proposal would raise the investment advice standards for retirement plans by modifying the definition of fiduciary to include any party who advises a customer about a retirement plan.

The DOL originally proposed this rule in 2010; however, it was withdrawn after complaints from the financial industry that it could potentially drive brokers out of the individual retirement account market.

Joe Russo, Chairman and Chief Executive of Advantage Financial Group, has expressed concerns that, proving that fiduciaries act in the best interest of clients — by tracking interactions with clients under the DOL rule — this would significantly increase regulatory expenses related to small accounts.

“It does cost money to serve the smaller accounts,” said Assistant Labor Secretary Phyllis Borzi. “They can still make money. It's not as if they're going out of business.”

After the DOL has finalized its proposed rule, the proposal will be sent to the Office of Management Budget for final approval.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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