ERISA requires fiduciaries of pension plans to perform certain due diligence on service providers and plan investments. This helps ensure that the fiduciary is acting in the best interest of the plan's participants. In 2010, the DOL proposed a change to the definition of fiduciary under ERISA that would have expanded the scope of those who become fiduciaries, which will capture more of the current services of 401(k) and IRA providers. This proposal would have forced investors from commission-based accounts to fee-based advisory accounts that could ultimately lead to a number of negative consequences for individual investors, including limiting investor choice, limiting investor access to education regarding retirement accounts, and increased costs for saving.
After significant objections were raised by SIFMA and numerous other groups, as well as Members of Congress from both parties, the DOL withdrew its initial proposal and stated it would conduct further economic analysis. In February 2015, President Obama announced that the DOL should move forward with its proposed rulemaking. On April 14, 2015, the DOL announced a re-proposal of the rule, which was followed by a period for public comment. The DOL received 3,530 substantive comment letters on its proposal - more than ten times the amount it received in 2010. In addition, 281 Members of Congress raised concerns regarding the proposal. On January 28, 2016, the DOL sent the final rule to the Office of Management and Budget (OMB). The final rule was published on April 6, 2016.
SIFMA Fiduciary Standard Resource Center
SIFMA is in the process of reviewing the final rules with our members to determine whether they remain generally unworkable for our members, and whether DOL adequately took into account the significant comments that were intended to ensure investors can preserve their access to financial guidance and choice at a price that is affordable for them.
SIFMA Comment Letters and Studies
Best Interests Standard for Broker-Dealers