The DOL is working to redefine the definition of the term “fiduciary” for retirement plan purposes, including individual retirement accounts. The SEC’s recent request for data on a possible rulemaking effort to impose a fiduciary standard seems to fail to take into account the DOL’s ongoing reform efforts.
The DOL project is broader while the SEC is examining the standards of conduct and other obligations of the broker-dealers. It is not possible to determine the effects of possible SEC reforms without taking into account the interaction with possible DOL reforms that may impact the IRA market. In January 2011, in a study mandated by Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC staff recommended rulemaking to impose a uniform fiduciary duty for broker-dealers and investment advisers that offer personalized retail financial advice. There may be an overlap between the SEC and DOL initiatives regarding investment services for IRA owners. The DOL’s redefinition of “fiduciary” would impose Employee Retirement Income Security Act of 1974 rules on broker-dealers and investment advisers, and could materially impact disclosure requirements.
In short, this bureaucratic mess will engender great debate as it moves forward.