May 12, 2015

DOL Proposes Fiduciary Standards (article)

DOL Proposes Fiduciary Standards

On April 20, 2016, the DOL’s Employee Benefits Security Administration released proposed standards (together with FAQs, a Fact Sheet and related guidance) for fiduciaries who provide investment advice in the retirement plan marketplace.  The goal of the proposal is intended to allay conflicts of interest of investment advisers in their recommendations of investment products. 


According to the proposed standard, a fiduciary is one who receives compensation for providing individualized or specifically directed advice to retirement plan sponsors, plan participants or IRA owners.  It should be noted that Health Savings Accounts, Archer MSAs and Coverdell Education Savings Accounts are included in the scope of covered plans.


Briefly, the rules broaden the scope of fiduciary duties to ensure that any investment advice provided by the fiduciary is solely for the client’s best interest.  In addition, policies and procedures must be adopted to mitigate any conflict of interest between the adviser and the client.  The adviser is also obligated to fully disclose any conflict of interest, including hidden fees and backdoor payments, it might receive as a result of rendering its investment advice.


The comment period on these standards and proposals ends July 6, 2015.


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation.   This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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