Since 2010, the Department of Labor (DOL) has attempted on several occasions to update its rules governing the provision of investment advice to participants in employer-based retirement plans and owners of individual retirement accounts. After its initial effort in 2010 was withdrawn in response to overwhelming opposition from the industry and Congress, the DOL adopted a package of rule changes in 2016. Several lawsuits were brought to challenge the 2016 rule, and in 2018, the 5th Circuit Court of Appeals vacated that rule in its entirety.
Following the 5th Circuit decision, federal and state regulators have significantly enhanced consumer protection rules. The Securities and Exchange Commission (SEC) adopted Regulation Best Interest (Reg BI) in 2019 to impose a best interest standard on all securities recommendations made by broker-dealers and their registered representatives, and in 2020, the DOL established PTE 2020-02 to provide relief from ERISA’s prohibited transaction rules for investment advice fiduciaries who, among other things, meet a best interest standard that aligns with Reg BI. Also in 2020, the National Association of Insurance Commissioners (NAIC) amended Model Regulation #275 to impose a best interest standard on recommendations of annuities by state-licensed insurance producers. The amended Model Regulation has now been adopted in 45 states covering more than 90% of the population.
On October 31, 2023, President Biden announced the DOL’s latest attempt to update its rules to treat all financial professionals who provide retirement products and services as fiduciaries; and on April 23, 2024, adopted the final Retirement Security Rule: Definition of an Investment Advice Fiduciary and the associated amendments to PTE 84-24, PTE 2020-02, and several other related PTEs.
DOL Fiduciary Rule Resources
How to get involved in IRI's work on the DOL Fiduciary Rule?
Going forward, IRI’s work on the DOL fiduciary rule will be handled on two parallel tracks.
IRI’s DOL Fiduciary Rule Implementation Program, which will support member company efforts to implement and comply with the final rule, will be led by the IRI DOL Standard of Conduct Implementation Working Group. This Working Group will provide a forum for IRI and members to share information, discuss interpretational questions, identify best practices, and develop compliance tools and resources. In addition, the Working Group will oversee targeted workstreams focused on particular aspects of the final rule. Questions about this Working Group or any of the individual workstreams should be directed to Rebecca Plowman, IRI’s Director of Compliance and Implementation.
IRI’s Standard of Conduct Working Group will continue to manage and lead IRI’s advocacy and litigation efforts related to the final rule, as well as IRI’s work on other standard of conduct matters at the federal and state levels. Questions about this Working Group should be directed to Jason Berkowitz, IRI’s Chief Legal & Regulatory Affairs Officer.