As Americans Struggle to Save for Retirement, the DOL offers little Protection

On July 7, 2020, the Department of Labor (the DOL) released its new investment advice rule. Rather than take steps to protect retirement investors, the DOL chose to reinstate its flawed five-part test, excluding broad swaths of financial professionals from a fiduciary obligation. The DOL will once again allow financial professionals to provide conflicted advice and benefit themselves, rather than requiring that they put retirement investors’ interests first.

The DOL has gone even further, and is proposing to lower the standard of conduct for financial firms and professionals that manage to be captured by the regulation, from a fiduciary obligation to a “best interest” standard. This represents a dramatic and unprecedented reversal of the intent of Congress in enacting ERISA. 

Today, PIABA has filed its comment letter, which may be found here. PIABA urges the DOL to adopt a new regulation, which would eliminate the need to satisfy a five-part test before someone providing investment advice would be deemed a fiduciary. There should be no need to establish that investment advice has been given on a regular basis, or pursuant to a mutual agreement that the advice will serve as the primary basis for the investment decision. Any individual providing investment advice to a retirement investor for a fee should be deemed an Investment Advice Fiduciary and held to the highest fiduciary standards.

To the extent the DOL establishes an exemption which would allow otherwise prohibited conduct, such an exemption should not lower the fiduciary obligations of Investment Advice Fiduciaries. Retirement investors deserve to have their retirement savings protected, as was intended by the enactment of ERISA. PIABA urges the DOL to adopt standards that go beyond those adopted by the SEC as part of Reg. BI, which the SEC itself conceded was not a fiduciary standard. The DOL must adopt true fiduciary obligations, including the duty to mitigate or eliminate conflicts of interest, not the duty to simply disclose them.


For more information, contact

Christine Lazaro
(718) 990-7627