What You Need to Know
- The department has released FAQs for investment professionals and investors.
- “The DOL has done an excellent job of giving real substance to requirements to act in the customer’s best interest,” consumer advocate Barbara Roper says.
- Labor said that it is continuing to review “issues of fact, law and policy related to the exemption.”
The Labor Department issued guidance Tuesday on its fiduciary investment advice for retirement investors, employee benefit plans and investment advice providers.
The guidance, released by Labor’s Employee Benefits Security Administration, relates to the department’s “Improving Investment Advice for Workers & Retirees” exemption and follows its Feb. 12 announcement that the Trump-era exemption would go into effect as scheduled on Feb. 16.
Ali Khawar, acting assistant secretary of Labor for EBSA, said Tuesday in a statement that the two-pronged guidance “provides helpful information regarding the importance of selecting an investment advice provider who is a fiduciary and the protections that are provided to retirement investors under the ‘Improving Investment Advice for Workers & Retirees’ exemption.”
The compliance-focused FAQ “provide assistance to financial institutions and investment professionals as they ramp up compliance with the exemption,” Khawar said.
Labor “made clear when it allowed the exemption to take effect as scheduled that additional guidance was on the way, so we were expecting this,” Barbara Roper, director of investor protection for the Consumer Federation of America, told ThinkAdvisor Tuesday in an email.
“Operating within the limitations of the exemption, the DOL has done an excellent job of giving real substance to requirements to act in the customer’s best interest and ensure that conflicts of interest are not allowed to inappropriately influence recommendations,” Roper said.
Assuming Gary Gensler “is confirmed this week as expected” to be chairman of the Securities and Exchange Commission, “we hope for similar guidance from the SEC,” Roper added.
Said Roper: “The rubber really meets the road in the answer to question 16 on mitigation of conflicts. It is really strong and provides a model we hope the SEC will follow. If they do, investors may actually start receiving the best interest advice they’ve long been promised.”