The U.S. Department of Labor's (DOL's) fiduciary rule has been a subject of debate and revision for years. The rule's latest iteration, proposed in 2023, aims to protect investors by ensuring that financial advisers prioritize their clients' best interests when recommending retirement investments. Even while still under consideration, this rule has the potential to significantly impact how companies structure their 401(k) plans.
To better understand the DOL's objectives, let's start with some context. The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to regulate retirement plans. ERISA established fiduciary standards as the basis for governing investment advice. Fiduciary standards demand that financial advisers provide the highest possible level of care when offering investment advice.
The DOL's most recent proposed rule changes contain three main points to focus on:
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