Basic education would not be considered fiduciary in nature, whereas advice would fall under the definition, but the distinction between the two is often blurry. “The line between advice and education is among the most difficult we have had to answer,” said Michael Davis, deputy assistant secretary for the DOL, during the 2012 PLANSPONSOR National Conference. “It’s the most difficult philosophical question we are dealing with.”
In October 2010, the DOL’s Employee Benefits Security Administration (EBSA) proposed new regulations to update the definition of fiduciary for purposes of the Employee Retirement Income Security Act (ERISA). DOL Secretary Hilda L. Solis told lawmakers in March 2012 that the agency is not rushing on its re-proposal of the new definition. (See “DoL Not Rushing on Fiduciary Definition Proposal.”)
Following comments received after its initial proposal last year, EBSA withdrew the proposal and announced it would solicit more information before making a new one. (See “Early Praise for EBSA’s Decision to Re-Propose Fiduciary Definition.”)
DOL has received more than 360 comments about updating the definition of fiduciary, Davis said. “This has been a very interesting discussion,” he said. “And any time you touch the fiduciary third rail, it’s going to be a passionate discussion.”
In determining what is advice rather than education, Davis said it is sometimes unclear whether an “advice-like” statement was made. In addition, recipients may not understand when they are receiving advice rather than education. “Does a recipient understand being sold a product versus being given broad advice?” he asked.
This will remain an important issue, Davis said, particularly as Baby Boomers continue through the system. “We think it’s a very important issue, and we’re taking all the comments we’ve gotten under serious consideration.”