Scrapped: Fiduciary rule regulating retirement plan conflicts of interest
A panel of the 5th Circuit Court of Appeals on March 15 struck down the so-called fiduciary rule, an Obama-era regulation that required retirement plan advisors to always act in clients’ best interests instead of recommending investments that generated broker commissions.
The rule took partial effect last June, but the Department of Labor later delayed enforcement efforts. Business groups opposed the fiduciary rule from the start, arguing that it prevented individual investors from receiving affordable retirement planning advice.
The DOL oversees retirement plans of all kinds because it enforces ERISA, the Employee Retirement Income Security Act of 1974.
The 5th Circuit ruling applies nationwide, freeing retirement plan advisors from having to comply with the fiduciary rule. Several large retirement plan advisors said they plan to follow the rule anyway.
It’s likely the DOL will formally revise or rescind the fiduciary rule altogether. Action now shifts to the Securities and Exchange Commission, which faces pressure to enact a conflict-of-interest rule on its own.
Advice: Consult your plan documents or contact your retirement plan administrator or broker to learn what effect, if any, this change will have on your retirement plan.