Fiduciary proposal would establish new requirements for retirement advisers

The Labor Department today proposed a new rule that would extend fiduciary status to advice on rollovers and investments related to commodities and insurance products like fixed annuities. In a fact sheet accompanying the announcement, the Biden administration said the purpose of the rule was to ensure advisers are not steering clients to products and fees that make the advisers money but may not be the best choice for savers.

The proposed rule would update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act to establish the new requirements, according to the Labor Department. Among other things, the proposal would capture rollovers made from a 401(k) to an IRA as investment advice.

The American Bankers Association will review the proposed rule to determine whether it furthers, rather than encumbers, a customer’s goal of a financially secure retirement, ABA SVP Tim Keehan said. “Banks have a proven track record of helping their customers save and prepare for retirement through 401(k)s, IRAs, and other valued retirement vehicles,” he said. “ABA and its members have long believed that banks, in their capacity as fiduciaries, should act in the best interest of their retirement customers. Bank customers entrust their banks to provide retirement services, including investment products, retirement planning and investor education.”