President Biden’s Fight Against  ‘Junk Fees’ Extends to the New DOL Fiduciary Rule

On October 31, the Department of Labor published its long-awaited proposed fiduciary rule titled the Retirement Security Rule. That same day, the White House issued a fact sheet touting the rule as part of President Biden’s fight against ‘junk fees’ and a way to cut these fees in retirement products.

The rule seeks to expand who would be treated as a fiduciary under ERISA as it relates to retirement plan investment advice. The new rule updates the original rule from 1975 and follows several failed attempts by the DOL to expand the fiduciary definition. Key components of the new rule include:

  • Expand the fiduciary definition to cover recommendations to purchase any investment product, not just mutual funds. The new rule would ensure that recommendations to purchase annuities or commodities must be made in the saver’s best interest.
  • One-time recommendations to roll assets out of an employer-sponsored retirement plan to an Individual Retirement Account (IRA) would be required to be made in the saver’s best interest. The current rule focuses on advice that is given on regular advice, so one-time recommendations on IRA rollovers were not included.
  • Coverage of adviser recommendations to retirement plan sponsors regarding which investments to offer employees in 401(k) and other employer-sponsored plans.

As a proposed rule, there is a 60-day window for public comment regarding the proposed rule. As with previous attempts at a new rule, the pushback from investment advisors and insurance companies is expected to be strong. We will continue to monitor both sides of the discussion and provide updates.    

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.

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