Erin Sweeney commented on some of the most significant changes between the U.S. Department of Labor's (DOL's) proposed and final fiduciary rule, also called the conflict-of-interest rule. "The DOL eliminated some of the most contentious disclosure requirements from the proposal, including eliminating the requirement to develop investment projections and distribute an annual disclosure to investors," Sweeney said, and the final rule exempts plans covered by ERISA from the requirement that a fiduciary investment adviser or financial institution enter into a written contract with an investor prior to making a "recommendation." Although individual retirement accounts (IRAs) and non-ERISA plans remain subject to the written contract requirement, the final regulation clarifies that the contract provisions can be incorporated into account opening documents.
"Another notable change is that the DOL eliminated the list of approved investments and indicated that advice providers are permitted to provide investment advice with respect to all asset classes to investors. The DOL also expanded the ability of plans with less than 100 participants to obtain investment advice from an advice provider without that provider becoming subject to the fiduciary rules," Sweeney said. "Finally, the DOL also clarified what is not covered -- the final rule spells out the DOL's view that health, disability and term life insurance policies are not subject to the fiduciary rule. Similarly, the DOL reserved all appraisal and valuation issues for a later rulemaking."