The Department of Labor’s recent Proposed Rule (the “Proposal”), which defines the term “fiduciary” as it applies to persons who provide “investment advice” to ERISA plans and IRAs, will impact the likelihood and severity of fiduciary litigation against life insurers and their agents. This article summarizes that potential impact, and will be supplemented periodically with updates focused on particular elements of the Proposal not covered here.

Under ERISA’s statutory scheme, fiduciary responsibility cannot be enforced against a defendant in litigation unless that defendant can be classified as a fiduciary with respect to the wrongdoing for which the remedy is sought. The statutory definition provides that a person is an investment advisory fiduciary with respect to a plan, only to the extent he or she, “renders investment advice for a fee or other compensation direct or indirect, with respect to any moneys or other property of [the plan] , or has any authority or responsibility to do so.” (ERISA {} 3(21)(A)).