DOL Fiduciary Rule Takes Effect | Capital Group

Capital Group Policy Spotlight

June 20, 2017

DOL Fiduciary Rule Takes Effect

The Department of Labor (DOL) fiduciary rule went into effect earlier this month, greatly expanding the definition of fiduciary investment advice. The DOL rule is the new uniform fiduciary standard for financial advisors, requiring them to act in their clients’ best interests.

The fiduciary rule also includes the Best Interest Contract (BIC) exemption, which allows advisors to continue to be paid on commission if they meet certain conditions. However, the full requirements of the BIC exemption are not applicable until January 1, 2018.

During the period between the rule’s and the BIC exemption’s effective dates, financial advisors who receive commissionable compensation will need to satisfy only a streamlined version of the BIC exemption — one that does not require a contract or new disclosures. The exemption requires only that advisors give advice that is in the best interest of the retirement investor, charge no more than reasonable compensation, and make no misleading statements about investment transactions, compensation and conflicts of interest.

During the transition period, DOL will continue to examine the fiduciary rule and the full BIC exemption to determine whether or not it may adversely affect the ability of Americans to gain access to retirement information and financial advice, and it is possible that further changes will be made. Notably, DOL has asked for comment on whether to delay the January 1, 2018, effective date.

Please continue to check our Policy Spotlight webpage for more information and updates related to the DOL’s fiduciary rule. We also offer resources from Capital Group to help advisors navigate this new regulatory landscape.

 

 


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. 

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.