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Government takes break from trying to kill fiduciary rule to defend it

Joe Mont | July 5, 2017

The Labor Department finds itself in the awkward position of defending its controversial “fiduciary rule” in court even while a repeal-minded public comment period is underway.

In April 2016, the Department of Labor finalized a new rule that creates a fiduciary duty for brokers and registered investment advisers who offer retirement advice. While prohibiting conflicts of interests, the rule also provides exemptions that, if applied for and granted, would allow these advisers to maintain fee-based arrangements.

In general, fiduciaries are prohibited from receiving commissions, which are considered to present a conflict of interest. The new rule, however, creates a Best Interest Contract Exemption for fixed index annuities and variable annuities. It allows fiduciaries to receive commissions only if they adhere to certain conditions, including signing a written contract with the consumer that contains enumerated provisions intended to protect their interests.

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