Investment Advice Fiduciary Class Exemption Published, Effective Date Set

Appearing in today’s Federal Register is Department of Labor Employee Benefits Security Administration (EBSA) Prohibited Transaction Exemption (PTE) 2020-02, which will provide guidance to investment advisors who counsel retirement and other investors. As noted in an Ascensus December 16 announcement, the guidance completes a process that began with 2016 regulations and exemptions issued under the Obama administration. Those regulations and exemptions were subsequently vacated in 2018 by a federal appeals court.

PTE 2020-02 maintains the impartial conduct standard that has been in effect since 2018, under which those who advise retirement and retail investors are to adhere to several principles:

• receive only reasonable compensation;
• make no misleading statements in the course of their advising; and
• act in the client’s best interest.

With today’s publication of the guidance, PTE 2020-02 becomes effective February 16, 2021.