3986.01 / What requirements must be satisfied for an investment advice fiduciary to qualify under the DOL’s fiduciary PTE 2020-02?
In 2020, the DOL introduced a new class exemption, PTE 2020-02. The exemption grants relief to financial advisors and institutions who provide investment advice (including retirement-related and rollover advice, see Q 3977.01) if the terms of the PTE are satisfied.1
In creating the PTE 2020-02, the DOL’s stated goal was to provide impartial conduct standards that are in line with guidance released by other regulators, including the SEC Regulation Best Interest and state-level fiduciary rules. To qualify under the PTE 2020-02, advisors must provide advice in accordance with impartial conduct standards, which include standards related to: (1) acting in the client’s best interests, (2) reasonable compensation, (3) refraining from misleading statements, (4) disclosure, (5) conflict mitigation and (6) retroactive compliance review (see below).2
The exemption, which was finalized late in 2020, is available to registered investment advisers, broker-dealers, banks, and insurance companies (financial institutions) and their individual employees, agents, and representatives (investment professionals) that provide fiduciary investment advice to retirement investors.