DOL Fiduciary rule Proposal sent to OMB

In April 2015, the Department of Labor (DOL) proposed regulations that would change the definition of a “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA) to expand the class of persons and entities that would be subject to strict fiduciary duties and prohibited transaction rules under ERISA and the Internal Revenue Code.

The rule proposal was sent to the Office of Management and Budget (OMB) on Friday, 1/29.  The OMB has up to 90 days to review the rule and is expected to expedite the process.  Once the OMB reviews and approves the rule, the DOL will release the final rule publicly which could be either March or early April.  Under the proposed rule, the financial services industry would have eight months for implementation.  After a final rule is published, Congress will have 60 legislative days to adopt a joint resolution of disapproval, if it opposes the regulation.

Gartland and Mellina Group (GMG) has been following the DOL fiduciary rule over the past 9 months and currently engaged with multiple clients to assist them in assessing the impacts from an operations, technology and product perspective and the overall design and implementation.

The potential impacts of the proposal are far reaching for broker dealers who are looking to comply with the BIC (Best Interest Contract) and will change how business is done / advice is provided for retirement brokerage accounts.

Under DOL’s proposed definition, any individual receiving compensation for providing advice that is individualized or specifically directed to a particular plan sponsor, plan participant, or IRA owner for consideration in making a retirement investment decision will now be a fiduciary.  The proposed rule also includes additional exemptions that are designed to give brokers and insurance agents (and their firms) the ability to continue to earn transaction-based compensation when advising retirement clients, subject, however, to certain new restrictions.

We welcome a conversation to better understand the challenges your organization is facing with respect to complying with the recent proposal and assess how we can assist. Please feel free to contact us for further discussion or a request for our qualifications.

Gartland & Mellina Group — A Management Consulting Company