Department of Labor's 2015 Proposed Fiduciary Rule: Background and Issues [April 1, 2016]   [open pdf - 820KB]

From the Document: "On April 20, 2015, the Department of Labor (DOL) proposed redefining the term 'investment advice' within pension and retirement plans. Under the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406), a person who provides investment advice has a fiduciary obligation, which means that the person must provide the advice in the sole interest of plan participants. Thus, redefining the term investment advice could affect who is subject to this fiduciary standard. […] Securities brokers and dealers who provide services to retirement plans and who are not fiduciaries under current regulations are not required to act in the sole interests of plan participants. Rather, their recommendations must meet a 'suitability standard' which requires that recommendations be suitable for the plan participant, given factors such as an individual's income, risk tolerance, and investment objectives. The suitability standard is a lower standard than a fiduciary standard. Under DOL's proposed regulation, brokers and dealers could be considered fiduciaries when they provide recommendations to participants in retirement plans. In addition to broadening the definition of investment advice, the rule would provide carve-outs for situations that would not be considered investment advice. For example, providing generalized investment or retirement education would not be considered investment advice under the proposed rule."

Report Number:
CRS Report for Congress, R44207
Public Domain
Retrieved From:
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html
Media Type:
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