Some guidelines for determining when a communication qualifies as investment advice.
We continue to take a deep dive into the Conflict of Interest Rule (Rule) promulgated by the U.S. Department of Labor on April 8, 2016.
Last month’s column concluded with a framework to determine if an advisor is subject to the Rule. This month’s column takes a closer look at the safe harbor exceptions/exclusions.
Some communications are not deemed by the Rule to be a “recommendation,” so they’re not “investment advice.”
These communications include (1) marketing or making available a platform, (2) general communications and (3) investment education. Let’s take a look at each.
Marketing or Making Available a Platform
A “person,” defined under the Rule as including a plan record-keeper, may market to a plan fiduciary its platform or make investment options available through its platform without being considered making a recommendation as long as:
• The person is independent of the plan fiduciary;
• The person provides written disclosure that it’s not providing impartial investment advice or fiduciary advice; and
• The plan’s individualized needs, its participants, or beneficiaries are not discussed.
However, the person is allowed to: