Labor Department Publishes New FAQs on Fiduciary Rule

Department of Labor regulators last week published their latest batch of questions and answers surrounding the new conflict of interest rule and the higher professional standards of advice under which thousands of financial advisors will be held.

The 16-page document offers guidance for consumers and clarifies the role of financial advisors in regard to consumers.

The 30 frequently asked questions, and the answers to them, are posed from the perspective of the consumer. They are listed on the home page of the DOL’s Employee Benefits Security Administration.

The document also answers specific questions about who is a fiduciary advisor under the rule, what counts as a fiduciary “recommendation,” and what it means for consumers to have advice provided under a best interest standard.

In addition, the DOL regulators answer questions about individual retirement accounts, 401(k)s and health savings accounts. The document also includes additional resource references and an appendix about questions investors might ask advisors.

The fiduciary rule comes into effect April 10 with recordkeeping and full disclosure taking effect on Jan. 1, 2018.

Previous FAQs Aimed at Advisors, Firms

Last week’s release follows a similar set of questions and answers published in October and aimed more squarely at helping advisors.

That set of 34 FAQs was contained in a 27-page guidance document to help advisors wade through a rule that is more than 1,000 pages long. The rule affects nearly every aspect of advice connected to the movement of money in and out of retirement accounts.

Those questions and answers, available here,  cover areas of applicability, exemptions and fee structures.

Answers also offer guidance on disclosures, compliance, reasonable compensation and grandfathering of accounts.

The first batch of FAQs targeting advisors and advisory firms was issued in the fall. This was to give advisors time to adjust technology platforms and overhaul internal procedures that consumers generally don’t have to worry about.

Insurance companies, broker/dealers, big distributors and retail advisors together have spent tens of millions of dollars adjusting to a rule that many retirement experts consider the most far-reaching since the passage of the Employee Income Retirement Security Act in 1974.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].