Brad Campbell Provides Insight on New DOL Fiduciary Rule

On October 31, 2023, the Department of Labor (DOL) released its revised fiduciary rule proposal. Several leading publications, including WealthManagement.com, PLANADVISER, PLANSPONSOR, InvestmentNews, Bloomberg Law, and InsuranceNewsNet, spoke to benefits and executive compensation partner Brad Campbell about what it could mean for advisors and brokers.

Campbell told WealthManagement.com that the scope of the extension of fiduciary requirements in this rule mirrored the previous attempt despite some changes. “They’re diverting the efforts of dozens or hundreds of people to retread an issue the DOL has already lost on.” He noted, “I think the DOL is intentionally writing a rule where they can claim they gave some lip service to the Fifth Circuit’s reasoning, though they really didn’t…They’re challenging a different court to find a different result, and at the end of the day, I think they think they got unlucky with the three judges they got last time.”

In PLANSPONSOR and PLANADVISER, Campbell explained that the proposal’s scope is “substantially similar to the 2016 rule that was vacated” by the Fifth U.S. Circuit Court of Appeals and that it relies on a superficial change in reasoning that amounts to “atmospheric language.” He added that the DOL does not have the authority to regulate IRAs in this manner and is “way out of its lane.”

Speaking to InvestmentNews, Campbell stated, “Repacking the primary elements of the 2016 Obama rule will not help [the DOL] address the fundamental problem — it exceeds their jurisdiction and authority and is likely to result in less access to advice for the very retirement savers they think they’re helping.” He continued, “[The DOL] is still trying to turn sales recommendations into fiduciary advice with an effective scope that is little different from the broad scope the Fifth Circuit [Court of Appeals] vacated in 2018.” Campbell also said, “They can’t keep trying through clever regulatory tricks to get around the fact that Congress never gave them jurisdiction over the standard of care for individual retirement account (IRA) transactions.”

Regarding the Obama administration finalizing its “fiduciary rule” in 2016, Campbell told Bloomberg Law, “It’s ironic that the former head of the agency that was responsible for that rule was one of the people who lost access to investment advice under it.” The full article is available for subscribers.

In InsuranceNewsNet, Campbell said the DOL is setting itself up for “a direct confrontation with the Fifth Circuit [Court of Appeals].” He continued, “The new standard would deem many recommendations to be fiduciary advice that the Fifth Circuit ruled Congress did not intend to capture…Simply because the DOL believes the law is outdated and doesn’t address modern concerns doesn’t confer on the agency the right to regulate IRA transactions and to impose new best interest standards of care the law did not authorize.” More likely, the department considers the Fifth Circuit decision an outlier that won’t stand up, according to Campbell.