Securities specialists at a prominent law firm are predicting that the U.S. Department of Labor will soon unveil a more expansive fiduciary rule for advisors.

Senior attorneys at Faegre Drinker expect the DOL will move forward with a fiduciary rule that would clarify that even advisors who engage in one-time transactions involving the rollover of retirement and IRA assets will be considered fiduciaries.

Fred Reish, a partner at Faegre Drinker, who spoke at the firm’s “Inside the Beltway” webinar on Thursday, said he expects the agency could release a proposal within three to four months.

This “new” proposal would come on the heels of a Trump-era fiduciary rule which went into effect, in part, a year ago, but wasn’t enforced by the DOL until earlier this month. The new proposal would ostensibly replace the rule firms are working to comply with now.

“It’s hard to imagine I’m talking about an old DOL rule that only went into effect last year. But what about the new fiduciary rule that is on the DOL’s regulatory agenda and is the development of a new regulation to define fiduciary advice?” asked Reish, who heads a team former DOL, Securities and Exchange Commission and Financial Industry Regulatory Authority (Finra) attorneys at Faegre Drinker.

“The prediction is it would define fiduciary advice as including one-time advice. In other words, take away the ongoing recommendation requirement. ... So if you gave one time advice or establish a relationship of trust and confidence with the investor than that would constitute fiduciary advice,” he said.

The DOL did not respond to a request for comment.

The current DOL rule has two main parts: a new prohibited transaction exemption allowing advisors to accept conflicted compensations, such as commissions ad 12b-1 fees on rollovers, as long as they act in the best interest of their clients and meet other requirements. The DOL also reinstated a "five-part test" from 1975 to determine what constitutes investment advice.

The new test, however, includes a caveat limiting fiduciary advice to the kind made “on a regular basis to the plan.” That gave commission-based advisors who aren’t providing ongoing advice a carve out.

But the carve out was threatened when the DOL said in follow-up question guidance that first-time advice would qualify as fiduciary advice if the financial professional and investor later establish an ongoing advice relationship or intend to do so.

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