ANSWER: You can tout the value of your services and educate the prospective client without becoming a fiduciary adviser.
Marketing one's own services or providing general information about your investment strategies is not a fiduciary act under the DOL rule.
The following are examples of fiduciary acts that could result:
recommendations to employers and other plan fiduciaries on plan design changes intended to increase plan participation and contribution rates constitute fiduciary investment advice under the fiduciary rule.
Labor states that like the fiduciary fule and related exemptions, the guidance is generally limited to advice concerning investments in IRAs, plans covered under the Employee Retirement Income Security Act and other plans covered by section 4975 of the Internal Revenue Code.
As to part of the guidance that addresses notifying plan sponsors of fiduciary status, "the issue is a little more complicated," Reish said.
Plan fiduciaries must reduce the risk associated with Department of Labor (DOL) investigations and plan participant fiduciary breach claims.
Most employers retain an independent fiduciary advisor to fulfill the obligation to pay reasonable fees with plan assets and to manage plan governance.
A fiduciary advisor, subject to the legal duties of prudence and loyalty and thus a professional purchaser of retirement plan services on behalf of clients, can control plan costs associated with recordkeeping, plan administration, employee benefit plan audits, fund management, and custody services.
Why is the fiduciary concept so difficult to understand?
Published law reporters abound with cases that apply fiduciary principles in a variety of circumstances and discuss them in various levels of detail.
The DOL also cautioned that if a potential investment requires that an inordinate expenditure of resources is needed to vote shares the fiduciary should consider whether the difficulty involved affects the market price.
Importantly, a plan fiduciary need not engage in a cost-benefit analysis before voting proxies.
The new fiduciary rule targets broker-dealers, their registered representatives as well as insurance companies and their agents.
The new definition of fiduciary investment advice applies to ERISA plans maintained by private employers, as well as the tax-qualified arrangements described in Code section 4975 which include sole proprietor plans, such as solo 401(k) plans, IRAs, Archer Medical Savings Accounts, Health Savings Accounts, and Coverdell education savings accounts.