WASHINGTON (CN) - Labor Department's Employee Benefits Security Administration proposes an Employee Retirement Income Security Act rule to more broadly define the circumstances under which a person is considered to be a "fiduciary" by reason of giving investment advice to an employee benefit plan or a plan's participants.
The rule is meant to protect beneficiaries of pension plans and individual retirement accounts.
The proposed rule amends a thirty-five year old rule that may inappropriately limit the types of investment advice relationships that give rise to fiduciary duties on the part of the investment advisor, according to the agency.
The proposed rule takes account of significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice; it is designed to protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when people providing such advice are subject to the act's fiduciary standards.
As an example of the broadened definition, the proposed rule would classify certain advisers as fiduciaries even if they do not provide advice on a "regular basis."
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