Policy Issues

Fiduciary Duty

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Department of Labor’s Proposed Rule Defining Fiduciary

In November 2010, the Department of Labor released a proposed rule re-defining the term "fiduciary" for purposes of the Employee Retirement Income Security Act of 1974 (ERISA). Generally, this proposed new definition would sweep in an extremely broad range of investment services provided to plan participants, IRA owners, and plan sponsors.

The current definition of fiduciary applies to advisors giving "investment advice for a fee or other compensation." Further, this provision is limited to investment professionals who provided regular investment advice serving as the primary basis for a plan’s investment decisions. Under the DOL’s proposal anyone who provides any advice regarding the "value, management or purchasing or selling of securities" to an ERISA plan will be considered a fiduciary, even if that advice is not provided on a regular basis and it was not the primary reason for the any investment decision. In addition, DOL’s proposed rule will also be applied to situations when professionals provide advice to a participant in an ERISA plan regarding investments in a defined contribution plan, for instance like a 401(k) plan.

Any questions or comments can be directed to The Financial Services Roundtable Vice President of Banking and Securities Brian Tate, at brian@fsround.org.

Department of Labor's Proposed Rule Defining Fiduciary

US Labor Department’s EBSA to re-propose rule on definition of a fiduciary