DOL fiduciary rule to take effect June 9

DOL fiduciary rule to take effect June 9

Skip Schweiss | June 1, 2017

On Tuesday, Department of Labor Secretary Alexander Acosta published a commentary piece in the Wall Street Journal, titled, “Deregulators Must Follow the Law, So Regulators Will Too”. In it, he announced that the “applicability date” (i.e. compliance date) for the DOL’s fiduciary rule will hold on June 9th.

This is a significant statement, bringing some long-overdue clarity to this regulation. So, starting June 9th, we have two changes to the standards of care applicable to those providing investment advice (including as to IRA rollovers) to retirement investors:


A new, expanded definition of a fiduciary under ERISA and/or the Internal Revenue Code (“IRC”). If you meet the following three criteria, you will be considered a fiduciary under ERISA and/or the IRC:

a. Give investment recommendations (including as to rollovers from a plan)
b. To a retirement investor
c. For compensation


If the above conditions apply, then you must abide by the “Impartial Conduct Standards” in the regulation, which entail:

a. Giving advice that is in the retirement investor’s best interest and reflects the care, skill, prudence and diligence of a prudent person acting in like circumstances without regard to your financial or other interests
b. Charging only “reasonable compensation”
c. Making no materially misleading statements

Most RIA firms should have few adjustments to make to comply, other than providing appropriate justification for rollovers and avoiding “double-dipping” for retirement accounts. Double-dipping occurs when an RIA charges a management fee to a client and invests some or all of the client’s money in an investment fund managed by the RIA. That can be done by an RIA for non-retirement accounts with appropriate disclosure and client consent, but it is a prohibited transaction for an RIA to do that with a retirement account.

Looking ahead, Secretary Acosta wrote that the department will continue to evaluate the rule’s remaining provisions, currently scheduled to take effect January 1, 2018, to determine if they should be pushed back, revised, or repealed entirely. The DOL also published an interim enforcement policy, which can be found below. We urge you to carefully review these materials and evaluate the regulation in light of your specific business practices.

The department will engage the public in discussion on those items, and TD Ameritrade Institutional will be involved in those discussions on your behalf. In the meantime, you can learn more by going to the following resources:

1. WSJ op-ed by Secretary Acosta:
2. The DOL released an accompanying FAQ document this week as well, which you should review.
3. You may wish to review our DOL Resource Center for additional relevant content, accessible through the information hub in the “Spotlight” section on Veo.
4. Follow-up WSJ editorial explaining how RIAs stand to win with this regulation, “Winners and Losers in a Post-Fiduciary World”:
5. Interim enforcement policy:

We will continue to closely monitor and engage on this topic, and keep you posted. As always, we welcome your thoughts.