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Update on Department of Labor’s Fiduciary Rule

The United States Department of Labor (“DOL”) has proposed a new rule that would expand the definition of “investment advice fiduciary” under the Employee Retirement Income Security Act 1974 (ERISA).  This legislation, which was scheduled to be phased in April 10, 2017, will automatically elevate all financial professionals who work with retirement plans or provide retirement planning advice to the level of fiduciary.  This will require financial advisors to act in the manner that is different from what they may be used to, and it is expected to have the most impact on those agents who work on commission.  To read more about the proposed changes, go here: (link to other three blogs on this topic here).

This proposed rule has faced a lot of controversy and obstacles and has been revised many times over the last six years.   Many thought the new rule would be implemented with no further delay or changes.  However, on February 3, 2017, President Trump issued a memorandum that will most likely delay the rule’s implementation by at least 180 days, and also cast doubt on the rule’s future.  The financial industry critics of the rule have been very vocal that it is too complex and costly, and that it would drive a majority of the business towards so-called robo investors.  President Trump’s memorandum instructs the DOL to conduct an economic and legal analysis to determine whether the rule is likely to harm investors, disrupt the industry, or cause in increase in litigation or the price of advice.  President Trump mandated that if the DOL concludes that the regulation will hurt investors or investment firms, it should propose a rule rescinding or revising the new regulation.

By delaying the implementation of the rule, President Trump has required the DOL to take a very hard look and conduct a cost/benefit analysis of implementing this rule.  If implemented in any version, the new rule will likely change the way retirement investments are handled and impact a vast majority of those providing investment services.

Stay tuned for more updates.

Click on link to access these relative articles:

The DOL Fiduciary Rule – From the Opposition’s Point of View

What Change will the DOL Fiduciary Rule Bring

Major Changes Coming for Retirement Investments


Kelly A. Pressler is an associate and practices General Civil Litigation and Municipal Litigation.  She can be reached by phone at 866-303-9595 toll free or 845-764-9565 and by email.

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