The Fifth Circuit Court of Appeals, in a 2-1 decision, vacated the Department of Labor’s fiduciary rule primarily on the grounds that the DoL unlawfully expanded the definition of the term “fiduciary” to include commissioned brokers. The Court opined that the DoL departed from the common law and contextual definition of “fiduciary” and dispensed with the criteria used for the past several decades. The Court agreed with business groups that argued that the Rule would cause many financial service providers to exit the market for retirement advice, thereby hurting the people that the DoL intends to protect.
OUR TAKE: We assume that the DoL will consider appealing this decision to the Supreme Court, which could take months/years. In the meantime, our recommendation is to comply with the best interest standard that went into effect last June and see what happens in the courts, in Congress, and at the DoL.