Updating Investment Advice Fiduciary Definition

The Biden-Harris administration announces rule to protect retirement investors' savings.  The US Department of Labor has finalized the Retirement Security Rule---to protect workers who are saving for retirement and rely on advice from trusted professionals o how to invest their savings.

This regulation is effective on September 23, 2024.

To do this, the rule has updated the definition of an investment advice fiduciary under ERISA (Employee Retirement Income Security Act and the Internal Revenue Code.

 

The final rule requires trusted investment advice providers to give prudent, loyal, honest advice free from overcharges.  These fiduciaries must adhere to high standards of care and loyalty when they recommend investments and to not recommend investments that favor the investment advice provider's interest - financial or otherwise - at the retirement savers' expense.

 

Under the final rule and amended exemptions, the financial institutions overseeing investment advice providers must have policies and procedures to manage COI (conflicts of interest) to ensure providers follow the guidelines.

 

Source(s): DOL News Release, received on April 23, 2024; Federal Register, accessed on April 25, 2024.