The fiduciary exemption for commissions

The hottest ERISA issue of 2015 is the DOL’s proposal to expand the definition of fiduciary advice. That proposal has become highly publicized because of the White House endorsement and the aggressive Wall Street opposition. Unfortunately, political rhetoric on both sides has dominated the discussion … to the detriment of thoughtful analysis. Hopefully, this brief article adds to the “thoughtful” side of the ledger.

The current fiduciary rule – and presumably the proposal — has three basic requirements: a fiduciary must act solely in the interest of the participants and beneficiaries; a fiduciary must act for the exclusive purpose of providing retirement benefits and paying only reasonable expenses; and a fiduciary must engage in a prudent process to make decisions. That’s pretty much it.