
Rollover or distribution advice
The Stapley letter
Questions raised
1. If an advisor who already is a fiduciary to the distributing plan recommends a rollover or distribution, is that recommendation automatically subject to ERISA fiduciary standards?- Does it matter whether the advisor is a fiduciary with discretionary management authority, plan administrator authority or merely provides fiduciary advice that must be implemented by a third party? For example, arguably, a fiduciary that has the power to cause a distribution that benefits itself should be more problematic than a fiduciary that simply recommends (but cannot cause or control) such a transaction. Neither question is directly addressed by existing guidance.
- Instead, is it possible and practicable to “firewall” fiduciary status by accepting fiduciary responsibility for advice to the plan or plan sponsor on an “ongoing” basis, but specifically disclaiming fiduciary responsibility for distributions?
- Is it preferable in the absence of clear guidance to avoid fiduciary responsibility for rollover recommendations irrespective of whether the advisor provides any fiduciary services to the plan?
- Reliance on the BIC Exemption, pursuant to transitional relief issued by DOL, for at least so long as such relief remains in effect;
- Attempting to level fees or otherwise avoid disparate fees for providing such recommendations;
- Requesting a new exemption; or
- Attempting to outsource distribution guidance to an independent third-party.
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