Navigating the DOL’s New Fiduciary Rules: A Game Plan for Broker-Dealers

This OnPoint focuses on the new and amended fiduciary investment advice regulations issued by the U.S. Department of Labor (DOL) and accompanying prohibited transaction exemptions (Final Rules), from the perspective of broker-dealers and their registered representatives who provide investment advisory services (Financial Advisors). Dechert provided a comprehensive analysis of the Final Rules in a May OnPoint, and today is contemporaneously publishing an OnPoint focusing on the Final Rules’ impact on mutual funds.

This OnPoint discusses: (i) the definition of “fiduciary investment advice” and the circumstances under which a broker dealer may be considered a “fiduciary” when it provides investment advice to “Retirement Investors;” (ii) the exemptions that may be available to broker-dealers that are fiduciaries; and (iii) various compliance considerations for broker-dealers seeking to rely on one or more exemptions under the Final Rules. For purposes of the Final Rules, “Retirement Investors” are: retirement plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) or Section 4975 of the Internal Revenue Code of 1986 (Code) and other plans that are not subject to ERISA (collectively, plans); plan participants and beneficiaries; individual retirement accounts (IRAs) and their beneficial owners; and fiduciaries of plans or IRAs.