April 21, 2016
Authored by: Katharine Finley and benefitsbclp
Earlier this month, the Department of Labor finally released the long-awaited “Definition of Fiduciary; Conflict of Interest Rule.”
This blog post is intended to do two things:
- Provide a brief history of the proposal, and
- Provide an overview of the key points of the final rule and how it differs from the 2015 proposal.
I. The “Conflict of Interest” Rule’s History
Since the adoption of ERISA, the governing regulations have mandated use of a five-part test that dictates whether an individual will be considered an investment advice fiduciary. In order to rise to the level of an investment advice fiduciary, the five-part test required that a person give investment advice: (1) about the value or advisability of investing in securities or other property; (2) on a regular basis; (3) pursuant to an agreement with the plan; (4) individualized to the specific plan; and (5) with the mutual understanding that such advice will serve as a primary basis for investment decisions.
The DOL initially proposed rulemaking to change the definition of an investment advice fiduciary back in October of 2010. The 2010 proposal generally did the following:
- suggested eliminating the five-part test and, more specifically, the