1934-40: Investment advisors are subjected to a fiduciary standard under the Investment Advisors Act of 1940. However, broker/dealers are only held to a suitability standard under the Securities Exchange Act of 1934, even when they provide investment advice services.
1974: The Employee Retirement Income Security Act of 1974 (ERISA) is passed into law. ERISA defines a plan fiduciary to include anyone who gives investment advice for a fee or other compensation with respect to any money or other property of a plan, or has any authority or responsibility to do so.
1975: The Department of Labor issues a five-part regulatory test for “investment advice” that gives a very narrow meaning to this term. Under the regulation, before a person can be held to ERISA's fiduciary standards, they must (1) make recommendations on investing in, purchasing or selling securities or other property, or give advice as to their value (2) on a regular basis, (3) pursuant to a mutual understanding that the advice (4) will serve as a primary basis for investment decisions (5) and will be individualized to the particular needs of the plan. All five elements must be present for the person to be held to the fiduciary standard.
1978: The DOL is given fiduciary oversight responsibility under Title I of ERISA. As part of Title I, the agency tackles oversight of most private-sector employee benefit plans.
1981: U.S. workers are introduced to 401(k)-style retirement plans. This starts the beginning of the shift away from defined benefit, or pension, plans to defined contribution vehicles. The 401(k) plans give the employees control over investment decisions and ownership over their retirement nest eggs. According to the DOL, it also leads to a need for greater regulation of retirement financial planning.
1986: Congress acts to replace the defined benefit plan for federal civilian workers (CSRS) with a less generous defined benefit plan (FERS) and a generous 401(k)-type plan (TSP). The action is received as an “endorsement” by the government of “shifting” from traditional DB plans to defined contribution plans, to which employees can contribute any amount.
1997: The Roth IRA is established by the Taxpayer Relief Act of 1997. It allows taxable compensation to be invested in a retirement account, with gains that are generally tax-free upon withdrawal.
2000s: Momentum grows among some lawmakers and administration officials for an expanded fiduciary standard. Growth of 401(k) and Roth IRA contributions is cited as the main reason. The total amount in 401(k) accounts grows from $384.9 billion in 1990 to $3.2 trillion in 2011, according to the Employee Benefit Research Institute.
July 2010: The Dodd-Frank Act is signed into law and gives the SEC the authority to establish a fiduciary standard for brokers and investment advisors if it determines there is a need. The SEC has yet to act on that authority.
October 2010: The DOL announces plans to redefine when a person providing investment advice becomes a fiduciary under ERISA.
January 2011: The SEC releases a staff study recommending a uniform fiduciary standard of conduct for broker/dealers and investment advisors.
March 1-2, 2011: A two-day public hearing is held by the DOL to gather input for its fiduciary proposal. The agency hears from 38 speakers and receives more than 300 written comments.
September 2011: The DOL withdraws its fiduciary-only rule, vowing to re-propose the rule in the future.
March 2013: The SEC issues a Request for Data and Other Information: Duties of Brokers, Dealers, and Investment Advisers.
June 14, 2013: Rep. Ann Wagner, R-Mo., introduces the Retail Investor Protection Act (RIPA) to govern retirement investing. Seen as an alternative to the fiduciary rule, the bill would bar the DOL from establishing a fiduciary-only rule until the SEC acts.
Oct. 29, 2013: The House passes the RIPA by a 254-166 vote, but the Senate refuses to take up the legislation.
January 2015: A White House Council of Economic Advisors’ memo endorsing a conflict of interest standard for retirement savers is leaked.
February 2015: The White House releases the CEA report, “The Effects of Conflicted Advice on Retirement Savings”; President Obama signals a push for a fiduciary standard in an address to AARP.
February 2015: The DOL sends a retooled fiduciary rule to the Office of Management and Budget for review.
Feb. 25, 2015: Wagner re-introduces the RIPA to the House.
April 2015: The DOL officially re-proposes a fiduciary-only rule, which is followed by a public comment period. The DOL proposal is actually three rules: extending the fiduciary standard to anyone who gives retirement plan advice, the Best Interest Contract Exemption (BICE) and changes to other exemptions.
May 2015: The public comment period on the DOL proposal is extended from 75 to 90 days.
May 2015: FINRA Chairman and Chief Executive Officer Richard Ketchum states support for a uniform fiduciary standard under the SEC and FINRA, and not the DOL.
July 21, 2015: Public comments are due on the DOL rule.
Aug. 7, 2015: In a letter to Rep. Ann Wagner, R-Mo., DOL Secretary Thomas Perez assures fiduciary opponents that the agency “will move forward with issuing a final rule that balances the input we have received.”
Aug. 10-13, 2015: DOL holds a four-day public hearing on the fiduciary-only rule. About 75 speakers address the agency over the four days. Written comments and petitions number more than 391,000, Perez has said.
Sept. 7, 2015: The DOL publishes the hearing transcript, which kicks off a second two-week comment period. The rule could be further revised based on the public hearing and the second comment period.
Mid-September 2015: Ninety-six House Democrats sign a letter to Perez asking for “improvements” to the rule. The move is touted by Republicans as evidence of bipartisan opposition to a rule.
Sept. 30, 2015: The House Financial Services Committee passes the RIPA. Only one Democrat votes with the majority.
Oct. 6, 2015: In a letter signed by 105 GOP House members, Reps. Sam Johnson, R-Texas, and Mike Kelly, R-Pa., urge the DOL to correct “shortcomings” in its proposal. The writers demand the DOL release its expected changes to the rule by Oct. 21. The DOL ignores the request.
October 2015: Several industry groups say they are switching efforts from trying to defeat the rule to trying to change troublesome aspects. Analysts say a final rule is inevitable.
Oct. 27, 2015: The RIPA passes the House by a 245-186 margin. Three Democrats vote with the majority, while two Republicans vote against the bill. Obama says he will veto the RIPA if it passes the Senate.
Fall 2015: Speculation centers on opposing lawmakers inserting a “rider” crippling the DOL rule into a broader budget bill that Obama cannot afford to veto.
Spring 2016: Analysts say the DOL needs to publish a final rule by May in order to meet Obama’s goal of having a new rule in place before he departs the White House in January 2017. A final rule would go to the Office of Budget and Management before being published in the Federal Registry within 30-60 days.
Summer to Fall 2016: The financial services industry prepares for full compliance with the new rule. Decisions must be made — the biggest being whether to take the Best Interest Contract Exemption and to continue the commission-based model. Firms and banks that reject the BIC exemption must convert to a fee-based model. That means retraining and changes to procedures and recordkeeping requirements. New employees may be needed.
Jan. 1, 2017: The projected date the new fiduciary rule will go into effect.