On April 23, 2024 the Department of Labor (DOL) has introduced the Retirement Security Rule, expanding the definition of investment advice fiduciary under ERISA. This new rule replaces the previous five-part test with a broader three-part test, ensuring more financial service providers meet fiduciary standards.

Key Highlights:

1. Broader Fiduciary Definition: Financial advisors now qualify as fiduciaries if they provide professional investment recommendations for a fee and present themselves as trusted advisers.

2. One-Time Advice Loophole Closed: The new rule subjects advisors to fiduciary standards even for one-time advice4.

3. Expanded Prohibited Transaction Exemptions (PTEs): Amendments to PTE 2020-02 and PTE 84-24 ensure fiduciary advice prioritizes clients’ best interests.