Update to the DOL’s Conflict of Interest Rule

Earlier this year, a group of financial services organizations sued the Department of Labor (DOL) seeking to invalidate the conflict of interest, or fiduciary rule published by the DOL in April 2016. In March 2018, the rule was vacated by the US Court of Appeals for the Fifth Circuit and as a result, the DOL has put enforcement of the rule on temporary hold.

Despite the court’s ruling and the DOL’s temporary suspension of enforcement activities, there may be additional appeals to the court ruling or other cases that impact the rule. It is also expected that the Securities and Exchange Commission (SEC) may weigh in on some of the same issues the rule addressed. Additionally, Congress could introduce legislation that could impact the rule.

The recent activity with the conflict of interest rule does not have an impact on the 401(k) Pension Plan and Retirement Security (RS) Plan. Retirement plan staff will continue to provide investment education for retirement plan participants which represents the best interests of these individuals and their families. The rule simply reinforced the importance of this approach.

It is unclear how other external investment firms will proceed. Some investment advisors may continue to comply with the rule, while others may no longer do so.

To learn more about the conflict of interest rule, please view this recorded webinar offered in May 2017 and associated summary of answers provided to respond to audience questions.