The U.S. Department of Labor's proposed redefinition of what triggers fiduciary status for retirement plan advisors and providers is drawing intense scrutiny from industry professionals, with concerns about its potential impact on information access and plan creation.

Prior to the January 2nd deadline for public comments, prominent figures like Ed Murphy, president and CEO of Empower, have voiced their opposition. A central worry surrounds the chilling effect of the new definition on certain conversations between providers/advisors and plan sponsors/participants. Fear of inadvertently triggering fiduciary status may lead many to withdraw from such communication, effectively cutting off a crucial source of information for those navigating retirement and plan decisions.

Murphy's point, highlighted in a recent planadviser.com article, illustrates this concern: "The proposal would create obstacles to plan creation and could effectively ban many sales conversations between providers and plans or individuals."

However, Tim Hauser, the DOL's deputy assistant secretary for program operations, maintains that the proposal is not meant to regulate routine "hire me" (sales) discussions. He has actively sought industry suggestions on language revisions to better clarify this intent.

Finsum: Defined Contribution professionals share their concerns with the Department of Labor regarding their proposed rule regarding what communication triggers fiduciary status.