DOL Conflicted Advice Rule
What is it?
The Department of Labor Fiduciary Rule seeks to address conflicts of interest related to retirement advice. With the new rule, the DOL has expanded the definition of a fiduciary, as it pertains to retirement advice. Two of the key expansions are (1) one-time advice is now considered a fiduciary act and (2) the rule extends application to IRAs and HSAs, including advice to take a rollover from a retirement plan.
What does it mean to be a fiduciary, again?
Simply, a fiduciary must act solely in the best interest of the participant. The fiduciary duties include duty of care, prudence, loyalty, good faith, confidentially and disclosure.[1]
What does this mean to me as a plan sponsor?
The application of the Fiduciary Rule impacts the relationships that you have with your service providers. If a service provider violates their fiduciary duties, they will have engaged in a prohibited transaction. The new DOL Fiduciary Rule outlines several prohibited transaction exemptions (PTEs) that service providers may rely on to avoid acting as a fiduciary.
What should I do?
- Understand if your current service providers are acting in a fiduciary capacity.
- If they are not acting in a fiduciary capacity, identify which PTE they are relying on.
- Assess the fees that are being paid for the services received to ensure they are reasonable.
- Consider whether your plan and participants would benefit from service providers that will act in a fiduciary capacity.
If you’d like help in reviewing your plan’s current arrangements and understanding how the DOL impacts your plan and participants, contact Lisa Petronio at 716-362-7372 or [email protected]. The investment professionals at Walsh Duffield / Strategic Retirement Partners provide fiduciary services to retirement plans.
[1] https://www.law.cornell.edu/wex/fiduciary_duty