Fidelity backs away from being 'point in time' fiduciary for 401(k) plans

Some advisers think this indicates other providers will pivot in light of DOL fiduciary rule's death

Jul 18, 2018 @ 3:39 pm

By Greg Iacurci

Fidelity Investments will no longer serve as a fiduciary when it helps employers select investments for their 401(k) plans, moving away from a policy the firm adopted last year in response to the Department of Labor's fiduciary rule.

Fidelity, the largest record keeper of defined-contribution plans, began offering these "point in time" investment fiduciary services to plans with less than $50 million when the DOL regulation took effect in June 2017. Fidelity helped plan sponsors as a fiduciary at a particular moment in time through a one-time investment recommendation; it didn't provide ongoing fiduciary advice.

However, the U.S. 5th Circuit Court of Appeals struck down the DOL fiduciary rule in March. The Obama-era regulation was officially taken off the books in June, leading Fidelity to change its policy, which had been unique among other providers.

"Without the DOL rule, Fidelity will continue to provide point-in-time investment assistance to plan sponsors as a non-fiduciary under ERISA," said spokeswoman Nicole Goodnow, referring to the Employee Retirement Income Security Act of 1974. "This is the same capacity in which Fidelity provided investment assistance to plan sponsors before the DOL rule took effect in June 2017."

The fiduciary rule, which raised investment advice standards in retirement accounts, changed the calculus for the many record keepers providing investment help to plan sponsors. Many times, that help came in the form of a proposed lineup of 401(k) investments, observers said. If providers had continued interacting with clients in the same way, the DOL regulation would likely have turned their previously non-fiduciary function into a fiduciary one, exposing them to more liability.

Fidelity was the only record keeper that said it would adapt by providing services as a fiduciary under the new regime, according to retirement plan advisers. This service, which Fidelity offered at no additional cost, concerned advisers who also offered fiduciary investment services and thought Fidelity was competing with them.

However, given the DOL rule's fate, the level of investment guidance is again considered non-fiduciary under ERISA, and Fidelity has distanced itself from the "fiduciary" label as a result.

"It doesn't surprise me they're backing away from it," said Chad Larsen, president and chief executive of advisory firm MRP. "If they don't have to say that's a fiduciary function, why would they?"

Ellen Lander, a retirement plan adviser at Renaissance Benefit Advisors Group, said the DOL regulation going away is the "best-case scenario" for service providers, who can revert to their prior way of doing business. She expects that Fidelity's pivot away from its prior policy will be a bellwether for other 401(k) providers.


What do you think?

View comments

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print