WASHINGTON BUREAU — Many parts of a U.S. Department of Labor fiduciary definition proposal are dangerously ambiguous, according to a retirement services vendor executive.
Charles Nelson, president of Great-West Retirement Services, Greenwood Village, Colo., made that argument recent during a U.S. Department of Labor (DOL) hearing on an effort to update the department’s “5 part test” for determining whether a retirement plan advisor should be treated as a plan fiduciary.
Labor Department officials – and many of the retirement services industry critics of the proposed definition update – say the current 5-point test ends up excluding many service providers who clearly are fiduciaries.
But retirement services trade groups say the proposed replacement definition is so broad that vendors could become fiduciaries entirely by accident.
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If adopted, the proposed fiduciary definition will “set the retirement industry back 25 years,” by dramatically increasing 401(k) plan sponsor and plan participant costs, Nelson said, according to a transcript provided by the Labor Department.