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Fidelity, John Hancock Expand Fiduciary Services Under DOL Rule

January 11, 2017

The Department of Labor’s fiduciary rule is causing several large record-keepers to expand their fiduciary services to investment advice, rollovers and other aspects of what was once treated as education rather than advice, InvestmentNews writes.

Under the rule, which requires retirement brokers to put clients’ interests first, the guidance or education provided by record-keepers such as Fidelity and John Hancock to defined contribution clients will in some cases be treated as advice, according to the publication. Executives at John Hancock Retirement Plan Services and Empower Retirement tell the publication they’re taking steps to deal with the added risk of taking on fiduciary responsibilities. They also insist to InvestmentNews the shift will not lead to higher costs for their clients.

Fidelity has sent its 22,000 corporate defined contribution plan clients information detailing their choices between advice and education-only services. The record-keeper now requires sponsors to sign an amendment choosing one of the services, according to documents first obtained by Pensions & Investments and cited by InvestmentNews.

In the third quarter, Empower began alerting its 35,000 plan sponsors about the difference between fiduciary advice and education that doesn’t fall under the standard, according to the documents also obtained by Pensions & Investments. Empower’s existing clients will have to sign an updated document on the company’s fiduciary services and new clients will need to sign a new agreement, Edmund Murphy III, the company’s president, tells InvestmentNews. Meanwhile, Patrick Murphy, president of John Hancock Retirement Plan Services, tells the publication no such amendment is necessary.

Some record-keepers, including Voya Financial, aren’t planning on many changes, according to InvestmentNews.


Voya will make an exception in the case of IRA rollovers, requiring its phone-based representatives to handle such requests using the best interest contract exemption, according to Charles Nelson, CEO for retirement at the firm, says the publication. Schwab Retirement Plan Services, meanwhile, plans to continue offering 401(k) advice through fiduciaries Morningstar and GuidedChoice, the company’s spokesman tells InvestmentNews.

It remains unclear whether the fiduciary rule will undergo changes or a repeal under President-elect Donald Trump. While several influential GOP lawmakers and industry groups are urging Trump to kill the rule, he has yet to take a stance on the issue. His pick to head the DOL is seen as opposed to President Barack Obama-era financial regulation but also hasn’t addressed the fiduciary rule directly. Nonetheless, a Trump campaign advisor who’s now part of the transition team has called for the rule’s repeal, and several legal challenges to the rule are still making their way through the courts.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.