The Department of Labor woke up from its 36 year coma and realized that the definition of fiduciary under ERISA is no longer working.
The Department of Labor will implement a regulation to update the definition of “fiduciary” to more broadly define the term as a person who provides investment advice to plans for a fee or other compensation. It would broaden the definition of “fiduciary” to further protect 401(k) participants from conflicts of interest, such as investment advisers recommending an option that brings in higher fees or promotes their own firm’s funds.
The 401(k) industry is littered with many brokers and insurance salesman pushing their own product at the expense of their clients and other providers like payroll companies who offer menus of funds, but disclaim any fiduciary role.
If a retirement plan advisor offers investment advice, they are a fiduciary, no matter how much they will disclaim that role in their contractual relationship with their plan sponsor clients. So while the client may be barred contractually from suing their advisor for a fiduciary breach, it will not deter from the Department of labor seeking action.