DOL’s fiduciary duty rule

April 2016

Overview

On April 6th, the Department of Labor (DOL) released the long-awaited fiduciary regulatory package which sets a new standard for advice given to retirement investors. Under this final package, financial advisors who provide investment advice will face limits on receiving commission-based compensation. With up to 50% of US retail financial assets in retirement accounts, the impact of the rule will be widespread across asset managers, broker dealers, and insurance companies.

  1. The commission-based compensation model is under less jeopardy.
  2. The DOL has more clearly distinguished between investment advice and investor education.
  3. Contracts needed to utilize the Best Interest Contract (BIC) exemption are more flexible and simpler to initiate.
  4. Simplified updates to existing contracts will likely ease BIC implementation.
  5. Proposed disclosure and document retention requirements for utilizing the BIC exemption have been softened.
  6. Most investment products will be allowed under the BIC exemption.
  7. Variable and indexed insurance products are both now covered under the BIC exemption. 
  8. A new “level fee fiduciary” concept is introduced, with eased conditions to utilize the BIC exemption. 
  9. Financial advisors can provide advice to more plans and IRAs without being deemed a fiduciary.
  10. Implementation timeline is extended.

Contact us

Dan Ryan
US Banking and Capital Markets Leader
Tel: +1 (646) 471 8488
Email

Alison Gilmore
US Asset and Wealth Management Marketing Leader
Tel: +1 (646) 471 0588
Email

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