The hottest ERISA issue of 2015 is the DOL's proposal to expand the definition of fiduciary advice. That proposal has become highly publicized because of the White House endorsement and the aggressive Wall Street opposition. Unfortunately, political rhetoric on both sides has dominated the discussion … to the detriment of thoughtful analysis. Hopefully, this brief article adds to the "thoughtful" side of the ledger.

The current fiduciary rule – and presumably the proposal — has three basic requirements: a fiduciary must act solely in the interest of the participants and beneficiaries; a fiduciary must act for the exclusive purpose of providing retirement benefits and paying only reasonable expenses; and a fiduciary must engage in a prudent process to make decisions. That's pretty much it.

While some of the attention is on that standard of conduct, most of the opposition has been to the prohibited transaction rules that apply to fiduciaries. In other words, the greatest controversy isn't over the fiduciary standard, but instead it is about the fiduciary prohibitions of certain conflicts of interest that apply to fiduciaries.

The most publicized of those prohibitions is that a fiduciary adviser must receive "level compensation," so that the adviser is not, in effect, able to recommend investments that increase the adviser's compensation.

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