The US Department of Labor’s Employee Benefits Security Administration (DOL) has released a proposed amendment to its regulation defining the circumstances under which a person or an entity is considered to be a “fiduciary” under the Employee Retirement Income Security Act (ERISA) by reason of rendering “investment advice” to an ERISA plan. The DOL has indicated that the proposed rule takes into account significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice, and that it is designed to protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when persons providing such advice are subject to ERISA’s fiduciary standards. If adopted, many service providers that are not currently treated as fiduciaries under ERISA may become fiduciaries and, therefore, be required to perform their services in accordance with ERISA’s more stringent standards of care, conflict of interest and prohibited transaction rules.

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