A central provision of the Department of Labor's new conflict-of-interest proposal would replace how the Employee Retirement Income Security Act defines "fiduciary" for plan advisors with stricter language.
Shortly after the landmark 1975 law passed, regulators created a five-part test to determine whether the advice of an outside plan consultant constitutes fiduciary services.
That test is now outdated, according to the DOL's proposal, and in need of updating to better reflect ERISA's original purpose, and better protect "plans, participants, beneficiaries and IRA owners from conflicts of interest, imprudence and disloyalty."
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