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US Department of Labor Finalizes Rules to Impose Fiduciary Duty on Financial Advisors Who Provide Retirement Advice to Retail Customers
04/06/2016
The US Department of Labor announced final rules that will, for the first time, subject investment advice to IRA and other non-ERISA plan clients to ERISA’s fiduciary standards and remedies. Currently, brokers and dealers and other advisers to retail retirement clients are required to adhere to a “suitability” standard with respect to their investment advice. Under the new rule and related prohibited transaction exemptions, which will be applicable beginning in April 2017, these financial professionals must act in the “best interests” of their client in order to continue receiving common forms of compensation (such as commissions, third party payments and other forms of variable remuneration). In eliminating certain compliance requirements, the final rule is less stringent than the proposed rule issued in April 2015, but it still represents a major departure from the status quo.
View Shearman & Sterling's client memorandum discussing the new rule and related exemptions.
View the final rule.
View the fact sheet released by the White House.
Financial Regulatory Developments Focus