USSC Review of Fiduciary Standard

Pursuant to the 2024 DOL standard, someone is classified as an investment advice fiduciary if: (1) they make an investment recommendation to a retirement investor, (2) the recommendation is provided for a fee or other compensation (including commissions), whether direct or indirect, and (3) the individual holds itself out as a trusted advisor by either stating that it is acting as a fiduciary under Title I or II of ERISA, or making the recommendation in a way that would indicate to a reasonable investor that it is acting as a trusted advisor making individualized recommendations based on the investor's best interests. An existing injunction applies to both the investment advice fiduciary standard and amendments to PTE 84-24, and PTE 2020-02. Until further court action occurs, the standard will not be effective, and the 1975 “five-part test” will remain in place. The Fifth Circuit historically sides with plaintiffs who advocate for looser regulatory schemes in the investment advice arena. Many now believe that the issue will ultimately be decided by the United States Supreme Court if the current DOL decides to appeal the matter.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about whether the U.S. Supreme Court is likely to uphold the Biden-era DOL investment advice fiduciary standard.

Below is a summary of the debate that ensued between the two professors.