The Hidden Provision in the Department of Labor’s Proposed Fiduciary Rule
The “best interest contract exemption” has profound ramifications for retirement plan participants.
In its proposed rule requiring that all advisors to retirement plans act as “fiduciaries,” the U.S. Department of Labor includes a “best interest contract exemption.” In my view, this exemption is as significant – if not more so – than the proposed rule itself.
Background of the fiduciary rule. Few retirement plan participants are aware their trusted advisors may not be “fiduciaries.” The securities industry has done a brilliant job of obfuscating the difference between the fiduciary standard, which carries a legal obligation to act in the best interest of the client, and the much lower “suitability” standard, which brokers and insurance agents owe to plan participants.
Read the rest of the article at US News.