The Department of Labor on Tuesday issued two pieces of guidance related to its investment-advice exemption that took effect in February.
The first piece includes questions a retirement investor can ask potential advice providers, such as: "What fees will I be charged? What conflicts of interest do you have in making investment recommendations to me? What does it mean to have investment advice provided in my best interest under the standards of the exemption?"
It also includes a list of frequently asked questions about the exemption, which was proposed and finalized under the Trump administration and allowed to take effect by the Biden administration. The exemption permits investment-advice fiduciaries to receive compensation for more types of guidance, including advice to roll over assets from a retirement plan to an individual retirement account.
The second piece of guidance is directed toward investment-advice providers who are relying on, or are planning to rely on, the exemption.
It includes background information, compliance dates and the definition of fiduciary investment advice under ERISA, as well as 12 frequently asked questions about complying with the exemption.
The Labor Department is continuing to review issues of fact, law and policy related to the exemption, and more generally, its regulation of fiduciary investment advice, it said in a news release.
In a statement supporting the Labor Department guidance, Commissioner Allison Herren Lee, acting chairwoman of the Securities and Exchange Commission, said, "The DOL is taking important and thoughtful steps to protect investors' best interest and ensure that fiduciaries meaningfully address conflicts of interest that can undermine the advice investors receive."
The SEC in 2019 adopted a best-interest standard that took effect in June 2020 as part of a package known as Reg BI. The standard was aimed at addressing the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors.
