Late one recent Friday afternoon, the Department of Labor dropped off a package that would redefine fiduciary investment advice under the Employee Retirement Income Security Act (ERISA). In this episode Nevin (Adams) and Fred (Reish) explore the possibilities – the history and potential future – of this initiative.

Known officially as “Conflict of Interest in Investment Advice,” according to a post on the Office of Management and Budget’s website, “this rulemaking would amend the regulatory definition of the term fiduciary...to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code."

As part of that, it purports to consider advisor practices, plan sponsor and participant expectations, and IRA owners who receive investment advice. It would also consider “developments in the investment marketplace,” including compensation structures that could expose advisors to conflicts of interest – and evaluate available prohibited transaction class exemptions and propose amendments or new exemptions.

Attempts to update the regulation – given foundation by the Employee Retirement Income Security Act of 1974 (a.k.a. ERISA) and structure by regulations issued in 1975 (from which the 5-part test came) – are not new. No fewer than four attempts to do so have been made in the past decade across three Administrations.

In this episode, Nevin & Fred look at those developments – both where we’ve been (and why), what’s changed (and hasn’t), and what the future for this latest iteration and its potential import might be.

Episode Resources:

Breaking News: New Fiduciary Rule Sent to OMB by Department of Labor https://www.napa-net.org/news-info/daily-news/breaking-news-new-fiduciary-rule-sent-omb-department-labor

Court Rolls Back Rollover Rule in 401(k) Fiduciary FAQ Fight https://www.napa-net.org/news-info/daily-news/court-rolls-back-rollover-rule-401k-fiduciary-faq-fight Rollovers, Regular Basis Focus of DOL Guidance https://www.napa-net.org/news-info/daily-news/rollovers-regular-basis-focus-dol-guidance DOL Confirms Investment Advice PTE https://www.napa-net.org/news-info/daily-news/dol-confirms-investment-advice-pte DOL Unwraps New Fiduciary Standard as a PTE https://www.napa-net.org/news-info/daily-news/dol-unwraps-new-fiduciary-standard-pte

Season 3, Episode 5: Nevin & Fred Live and In Person – Part 2

Nevin & FredBy Nevin AdamsApr 25, 2023