Department of Labor Issues Adviser, Investor FAQs on Fiduciary Investment Advice

The Department of Labor on Tuesday released frequently asked questions for advisers and investors on fiduciary investment advice. The guidance addresses the recently finalized Prohibited Transaction Exemption 2020-02 and the regulation’s five-part test that determines whether a person renders investment advice under the Employee Retirement Income Security Act.

The adviser-focused FAQs focus on questions arising from the definition of “fiduciary investment advice” and compliance with the new exemption. The investor-focused release anticipates questions that retirement investors may ask concerning the best interest standard, adviser services and fees, conflicts of interest and disclosures provided to the investor. Both releases emphasize the “fundamental investor protections” provided by the “core components of PTE 2020-02, including the Impartial Conduct Standards and the requirement for strong policies and procedures.”

The DOL also stated in the adviser-focused FAQs that it anticipates taking further regulatory and sub-regulatory actions, including amending the fiduciary investment advice regulation, amending PTE 2020-02, and amending or revoking certain other class exemptions available to investment advice fiduciaries.