​Fiduciary Rule

The fiduciary rule, also known as the conflict of interest rule, was released by the Department of Labor's Employee Benefits Security Administration (DOL EBSA) during the Obama Administration. Its premise: That financial and investment advisers should act solely in the best interest of the individual when giving advice or selling products and services. Its goal: to protect individuals' financial and retirement security.

The rule has had a long history filled with ups, downs and mixed support. Those opposed to the rule—often those in the financial services industry—say the rule will hurt the ability of individuals to receive financial advice, and will add compliance complexity and costs for their firms. The final rule was released in April 2016, with an effective date of June 7, 2016 and an applicability date of April 10, 2017. On April 7, 2017, DOL delayed the applicability date to June 9, 2017 and as a result, on that date​, investment advice providers to retirement savers became fiduciaries, and the "impartial conduct standards" became requirements of the exemptions. Othe​r exemption conditions scheduled to become applicable on April 10, 2017, were delayed until January 1, 2018, while DOL conducts its ongoing examination of the rule. On August 31, 2017, DOL proposed another delay (to July 1, 2019) for the full implementation of the Best Interest Contract Exemption and other provisions of the rule.  

Updates

  • On November 29, DOL officially delayed the full implementation of the Best Interest Contract Exemption and other provisions of the rule and extended the transition period for review to July 1, 2019.
  • On October 27, the Treasury Department released a report saying they support the DOL reexamination of the fiduciary rule​​ and outlining the potential harm caused by the rule.​​​
  • On August 31, DOL proposed a delay in the full implementation of the ​Best Interest ​Contract Exemption as well as other provisions of the rule.​ These provisions were being reviewed during a transition period scheduled to end on January 1, 2018. This proposal would extend the transition period to July 1, 2019.​​ The DOL also released Field Assistance Bulletin ​2017-03 providing information on enforcement during the transition period.
  • On August 4, EBSA released FAQs on​​ a fiduciary status issue and whether​ recommendations to contribute to a plan or to change plan design to increase participant contributions constitute​ investment advice. ​​
  • ​On June 30​, EBSA​ released a request for information​, ​seeking pu​blic input on possible changes to the rule and possible additional exemptions.   ​​
  • On June 9, 2017, ​​parts of the fiduciary rule are ​​implemented
  • On June 1, Securities and Exchange Commission (SEC) chair issued a public statement​ opening a comment period to find out how the rule will impact retail investors and others.  ​
  • On May 22, the new Secretary of Labor Alexander Acosta announced​ there​ is no legal basis to further delay the rule and it will become applicable on June 9, 2017. ​​​
  • Also on May 22, EBSA announced in Field Assistance Bulletin 2017-02​  that during the phased implementation period ending on January 1, 2018, the DOL will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions.​ In addition, EBSA ​released FAQs related to the transition period for the rule.
  • ​On April 4, the DOL EBSA issued a final rule​ delaying the fiduciary rule. 
  • On February 3, 2017, President Trump issued a memo​ directing the DOL EBSA to examine the rule to determine whether it may adversely affect an individual's ability to gain access to retirement information and financial advice.​​
  • Five lawsuits were filed to negate the rule or delay its applicability date, three of which were combined. Judges in three of the cases ruled in favor of the EBSA (upheld the rule). A fourth case is pending.

Background/Explanation of (Original) Final Rule

Regulatory Updates

Legal Challenges