The Department of Labor (DOL) Fiduciary Rule (the “Rule”) regulatory package was released on April 6, 2016. The DOL Rule significantly expands the definition of investment advice as it relates to employee benefit plans and individual retirement accounts, expanding the universe of individuals and firms who will be considered fiduciaries subject to the stringent fiduciary standards of ERISA and the Internal Revenue Code. Because a fiduciary is required to act in the “best interest” of the investor, firms have been working to revise their business models to demonstrate that the advice they provide to retirement investors is in investors’ best interest.
The Rule has withstood several legal challenges, a change in administration following the November 2016 presidential election, and a brief delay, becoming applicable on June 9, 2017. Additionally, an 18-month delay on requirements to comply with the remaining provisions in the Rule was approved by Office of Management and Budget on August 29, 2017, extending the applicability date from January 1, 2018 to July 1, 2019.
With ~50% of US retail financial assets in retirement accounts, the Rule has driven significant changes to product, pricing, compensation, compliance regimes, technology and operations practices at US wealth managers, asset managers, retirement platform providers and annuities manufacturers and distributors.
