Los Angeles partner Fred Reish and Washington, D.C., partner Brad Campbell were quoted in the media regarding the future of advisors’ fiduciary compliance responsibilities in the wake of the U.S. Court of Appeals’ vacature of the Department of Labor’s fiduciary rule.
In an article for Employee Benefits News titled “Fiduciary Rule May Be Gone, But Many of Its Requirements Still Apply,” Brad notes that since the fiduciary rule no longer applies to the advice industry — including all of its prohibited transaction exemptions — the industry has reverted to the pre-DOL versions of those exemptions. “Just because we are going back to the old rule doesn’t mean we’re going back to the old interpretations much of the industry had fallen into,” Brad said. “I think over time, 20 or 30 years, we’ve fallen into using a shorthand that is probably not correct. If you have an adviser on the sales side, if you are a registered rep or insurance agent or someone in that capacity, this person is not an ERISA fiduciary, even when advising 401(k) plans every day on their menu. If you are an RIA, you were viewed as an ERISA fiduciary. That’s not what the law said, but that’s how a lot of folks came to perceive the 1975 regulation. We are not going back to that.”
An article for ThinkAdvisor titled “DOL Fiduciary Rule's Death Doesn't Mean Business as Usual: Ex-EBSA Head” quotes comments on the topic made by Fred and Brad during their recent “Inside the Beltway” webcast. During the webcast, Fred noted that “many advisors to plans would be fiduciaries” even though the fiduciary rule has been vacated. That’s for two reasons, Fred said. “The first is that the old fiduciary definition, which applies again after the 5th Circuit decision, is ‘functional,’ [which means] it applies based on the facts that actually happen, and not on the type of advisor. [Second], under that functional definition, most retirement plan advisors satisfy the definition and therefore are fiduciaries. We believe that the DOL will enforce that more actively than in the past.”