Unwrapping Fiduciary Regulatory Change

Many of my colleagues and I have recently been labeled ‘ERISA nerds’, a title we wear with pride. My career has focused on delving into retirement regulation and how to interpret it.

As I look at the new Department of Labor (DOL) fiduciary regulation package, I can’t think of many other times in the course of my career where our industry has faced such sweeping change. We have joked that it felt like Christmas morning when opening that present from your eccentric great uncle. What would we find when the regulatory package was finally unwrapped and we could dig in and start to try to figure out what it really may mean?

Now that it’s been unveiled the real work has begun as we conduct a detailed analysis to determine what it will mean for our industry. After our initial review, I can safely say we know a lot and yet very little — less than we would like.

With more than 900 pages to go through, there’s a lot to uncover. As an industry we continue to learn new things about the regulatory package. We already know it contains changes that will impact our business, your business and your firm’s business. Not to overlook the impacts to both your plan sponsor and individual investor clients.

Yet many of the components still need additional clarity. The DOL has said that it will try to provide some, but exactly where that will take us is unknown.

What we know now.

At its heart, the regulation significantly broadens who is considered an ERISA fiduciary. Put simply, it will be much easier for advisors and service providers to cross the line from education to advice for both ERISA-covered retirement plans and Individual Retirement Accounts (IRAs).

Fortunately the regulation gives a number of exceptions and carve-outs for those not acting as fiduciaries, and there are prohibited transaction exemptions for those that will be fiduciaries, that will help. There’s no doubt this will change the way we both work with clients. How much it will change is yet to be determined.

What we hope to learn.

Although we know some, we need to know more in order to really understand how this will impact our business model and the business model that your firm chooses going forward.

That’s why our experts, along with others in the industry are working together to seek more clarity from the DOL. Some of this will come from sub-regulatory guidance, likely in the form of a Q&A. Hang on and look for more information and direction in the months to come.

 What can you do to prepare?

Given the language’s ambiguity and complexity, much will be left to the interpretation of each company and legal experts. However, there are steps you can take to prepare for the future.

  • First, stay in touch with your broker dealer/financial firm. Look for guidance but be patient — everyone is still digesting and interpreting the regulation.
  • Review your practice. A good first step. Determine where your compensation is level and where it’s not.
  • Develop good documentation processes. This will be even more important moving forward.
  • Stay informed. We’re working hard to provide you with information and relying on some of our industry partners. Check out a recent Fiduciary Q&A provided through our partnership with Groom Law Group.


As we look for more answers, we’ll continue to un-wrap the layers of this complex package to help you understand what it may mean. Stick with us. We’ll continue to share ongoing updates from Principal® and our industry partners as well as provide you with assistance as your firm establishes their approach to comply with the new regulatory requirements.

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