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Connecticut CPA
July/August 2017
By George J. Kasper, J.D., LL.M., Pullman & Comley; Member, CTCPA Employee Benefit Plans Interest Group
ast year the U.S. Department of
Labor (DOL) released a contro-
versial new fiduciary regulation
(the "Fiduciary Rule" or "Rule") and
related exemptions that impact invest-
ment advisers to certain retirement
plans, IRAs, and other similar arrange-
ments. The Rule has garnered much
attention due to its broad application
not only to financial institutions and
their advisers, but others who provide
services to plan sponsors, partici-
pants, and retirement account owners
as well. In the midst of ongoing debate,
legal challenges, and a directive from
President Trump, the DOL delayed the
Fiduciary Rule "applicability date" until
June 9, 2017.
Under the Employee Retirement In-
come Security Act of 1974 (ERISA), the
term "fiduciary" includes a person who
renders "investment advice" to a plan
for a fee or other direct or indirect com-
pensation as to any plan assets (or has
any authority or responsibility to do so).
The Rule expands the definition of "in-
vestment advice" and accordingly, the
types of providers who are considered
to be ERISA fiduciaries. Prior to the
new Rule, a person was considered to
render "investment advice" only if the
advice was provided as to the value
of securities or property, or as to the
advisability of investing in, purchasing,
or selling securities or other property;
on a regular basis to the plan pursuant
to a mutual agreement or understand-
ing that the advice would serve as a
primary basis for investment decisions
with respect to plan assets and indi-
vidualized based on the needs of the
plan or individual.
As of June 9, 2017, the Fiduciary
Rule's amended definition of "invest-
ment advice" replaces the prior defini-
. Generally, unless an exemption
exists, a person is deemed to render
investment advice with respect to
money or property of a plan or IRA if
the person provides to the plan, plan
fiduciary, plan participant, or benefi-
ciary, IRA, or IRA owner certain types
of recommendations for a fee or other
Investment advice is now defined in
terms of "recommendations" that in-
clude a recommendation as to the
advisability of acquiring, holding, dis-
posing of, or exchanging securities or
other property, or a recommendation
as to the investment of securities or
other property to be rolled over or oth-
erwise distributed from a plan or IRA.
Investment advice also includes rec-
ommendations as to the management
of securities or other investment prop-
erty including recommendations on
investment policies or strategies, port-
folio composition, selection of other
persons to provide investment advice;
and recommendations with respect
to rollovers, transfers, or distributions
from a plan or IRA, including whether,
in what amount, in what form, and to
what destination such rollover, transfer,
or distribution should be made.
According to the Rule, "recommenda-
tion" means "a communication that,
based on its content, context, and pre-
sentation, would reasonably be viewed
as a suggestion that the advice re-
U.S. Department of Labor's New
Fiduciary Rule Now Applies
Expands definition of investment advice
See the DOL's recently published Fiduciary Rule Conflict of Interest FAQs (Transition Period) (the "FAQs).