An Objectivity Lesson: The More Objective the Presentation, the Less Likely It Will Seem Like Advice

Benefits and executive compensation partner Fred Reish and counsel Joan Neri coauthored an article for PLANADVISER discussing registered investment advisers (RIAs) who provide investment education for Employee Retirement Income Security Act (ERISA) plan participants regarding plan rollovers.

In the Q&A article, one such RIA asked, “Would I be considered an ERISA fiduciary under the Department of Labor’s (DOL) expanded interpretation of fiduciary advice, and would I need to use the department’s Prohibited Transaction Exemption (PTE) 2020-02 to avoid a prohibited transaction?”

Reish and Neri explained that it would depend on whether the information supplied to a participant was accurately presented in an objective manner without an implied recommendation to roll the participant’s account over to an individual retirement account (IRA) with the RIA.

As a starting place for distinguishing between investment advice and education, the authors pointed to guidance in the DOL’s Interpretive Bulletin 96-1, which identifies four categories of information that do not constitute investment advice. They added that if the proposed IRA portfolio for a participant was considered an implied rollover recommendation, the RIA would be providing fiduciary advice under the DOL’s five-part test.

In conclusion, the authors recommended that RIAs review their current investment education practices to ensure that the information presented to investors does not constitute an implied recommendation to roll over account savings to an IRA with them.

The full article is available for PLANADVISER subscribers.