DOL puts out another Fiduciary FAQ

With an April 2017 deadline fast approaching, the Department of Labor (DOL) issues another frequently asked questions (FAQs) concerning the fiduciary rule which is always nice to get their interpretations of the rules with certain hypotheticals.

The FAQ addresses general communications with plan participants, investment education and exemptions for independent fiduciaries. Other areas in the FAQ cover mandatory distributions, revenue sharing when plan fees are offset, and marketing platforms.

There was nothing earth shattering in the FAQs, but here are some things that piqued my interest:

The FAQ clarifies that an adviser charging clients a level asset-based fee for providing advice on 401(k) fund offerings may use revenue-sharing payments to offset part or all of that level fee, without worry about the fiduciary regulation.

The FAQ clarified that investment advisers won’t be considered fiduciaries for investment decisions made by their clients if those decisions are against the adviser’s recommendations.

The FAQ stated that employers can recommend that plan participants increase their contributions to a suggested percentage of compensation to maximize the employer match without that communication being treated as fiduciary investment advice.

It’s now clear that financial service providers’ interactive investment tools will be treated as investment education and not as fiduciary investment advice.

The FAQ also made clear that if a representative of a recordkeeper meets with a fiduciary advisor to a plan and with the plan committee, the recordkeeper is entitled to the ‘wholesaler exception’ to the fiduciary rule, so that means the recordkeeper would not be considered a fiduciary.

All in all, nothing earth shattering.

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