Skip to main content

You are here

Levine: 31 Flavors of ‘Fiduciary’

By John Iekel

Rules for fiduciaries – and what the term itself even means – figured prominently in a May 2 session of the Plan Sponsor Council of America Annual Conference in Scottsdale, AZ. An expert panel offered their take on the rule (rules?), the fate of such guidance and what it all means.

Sharing their perspectives were David Levine and Brigen Winters, both Principals with Groom Law Group, as well as Steve McCaffrey, Immediate Past Chair of the PSCA Board.

“The great question is, ‘Which fiduciary rule?’,” Levine said in response to a question regarding the fate of the Department of Labor’s fiduciary rule. He noted that the DOL did not appeal the 5th U.S. Circuit Court of Appeals’ ruling vacating the rule, and that the fiduciary rule the Securities and Exchange Commission recently proposed “is in its early stages.” And that latter rule, Levine said, left gaps and openings – into which the states and state insurance regulators might step in. “It’s 31 flavors of the definition of “fiduciary,” he said.

Despite the endless pushmi-pullyu that fiduciary rules have become, “you should not be struggling,” Levine told the audience of plan sponsors. “There’s not much you can do.” Actions that plan sponsors can take include:

  • asking advisors and service providers if they are fiduciaries;
  • reviewing contracts;
  • adding to the process a question regarding whether a service provider is acting in one’s best interest; and
  • understanding what service providers do.

But Levine put one action above all others. “Right now,” he said, “I’d focus on one word: monitoring.”

But some courses of action may be a bit less discernible, Levine and Brigen added. The way the 5thCircuit put the brakes on the DOL rule – it was vacated on March 15 – means that it is as if the rule never existed, Brigen noted, and never really had to be complied with. But as a crystal ball to divine the court’s ruling wasn’t handy and the rule had become effective, it had been applied by many. “Remember that some clients acted on provisions of it that now don’t exist, and are treated as never existing,” Levine said. “This can create some odd outcomes,” he observed.

In dealing with the fiduciary rule, Levine summarized: “There’s been a lot of learning going on” in the industry and at the DOL.