3986 / What is the current DOL definition of “investment advice fiduciary”?

Editor’s Note: Two separate district courts in Texas have granted a stay of the effective date of the DOL’s 2024 fiduciary standard and related amendments to PTE 84-24 and PTE 2020-02, which were set to become effective September 23, 2024. See Federation of Americans for Consumer Choice v. Department of Labor, No. 6:24-cv-163-JDK (E.D. Tex. 2024) and American Council of Life Insurers v. Department of Labor, No. 4:24-cv-00482-O (N.D. Tex. 2024). The DOL has appealed. As of the date of this publication, the 1975 five-part test continues to apply. The materials below discuss the existing rules as well as the DOL amendments.

In April of 2024, the DOL finalized their proposal to once again modify the definition of “investment advice fiduciary.”

Under the 2024 rule, a financial services professional is classified as an investment advice fiduciary if (1) the provider offers investment advice or makes investment recommendations to a retirement investor, (2) the advice or recommendation is made for a fee or other compensation and (3) the financial services provider either specifically states that they are acting as an investment advice fiduciary or makes the recommendation within a professional relationship in which an investor would reasonably expect to receive sound investment recommendations that are in their best interest.