A federal appellate court vacated the so-called “fiduciary rule” adopted in 2016 by the Department of Labor. The United States Court of Appeals for the Fifth Circuit determined that the Department of Labor exceeded its authority by issuing the rule, which essentially required financial professionals to put their clients’ needs in front of their own. The rule was imposed upon financial service providers including brokers and insurance agents who deal with IRAs, 401(k)s, and other tax-deferred plans.
“Financial service providers are currently free from the mandated best interests of investors’ standard of care of that rule. You need to be cautious in investing and not end up with your adviser profiting more than you do from their advice,” advised partner Keith Leonard.
This isn’t the final decision on the case; the Department of Labor could request that all of the Fifth Circuit judges hear the case (a three-judge panel made the March decision). This case could eventually be heard in front of the Supreme Court.