The DOL's New Investment Advice Regulation

The Department of Labor recently published its controversial final regulation amending rules that had been in place since 1975 concerning when a person is deemed to be a “fiduciary” of an ERISA plan or an IRA by reason of providing investment advice.

The stated purpose of the regulation is to mitigate the adverse impact on retirement savers of conflicts of interest inherent in the market for financial products purchased with retirement savings.  The regulation fundamentally changes how the fiduciary responsibility provisions of U.S. pension law apply to financial institutions that deal with retirement assets.  The regulation is scheduled to become effective generally on April 10, 2017.  This memorandum briefly summarizes the regulation, analyzes the resulting regulatory framework and discusses important issues concerning its application in certain contexts.