President Trump has signed an executive order instructing the Department of Labor (DOL) to “rescind or revise” the controversial ruling passed last year imposing a “fiduciary rule” on retirement accounts. With an applicability date of April 10, 2017, the rule broadly defines who is a “fiduciary” of an employee benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA) as a result of giving investment advice to a plan or its participants. If the rule goes into effect, it will impose a wide array of responsibilities on many advisers and plan service providers to better protects plans, participants and beneficiaries from conflicts of interest, imprudence, and disloyalty.
Although planned changes might now be subject to delay, big brokerage firms will likely continue to implement a heightened standard of care for delivering retirement investment advice. Many firms have already moved away from their higher-cost products and are working to make their fees more transparent and easier to explain to clients. However, employers should still take steps to ensure that fees are clear and that their retirement plan advisers are putting the interests of the plan and its participants first. Employers, plan sponsors and plan administrators can help protect employees’ retirement plan assets by simply asking financial advisers if they are fiduciaries, how they are paid and what are the fees. Read more in this New York Times article.