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The Old Line State Crosses a Fiduciary Line

Another state has moved to impose its own fiduciary standard with no ERISA exemption.

The Maryland legislature aims to implement a state level fiduciary standard through a comprehensive consumer protection bill introduced Feb. 4 by State Sen. Jim Rosapepe.

The bill grants authority through the Maryland Commissioner of Financial Regulation to adopt regulations impacting: broker dealers, a broker dealer agent, an insurance producer, an investment advisor, a federal covered adviser and an investment adviser representative. The legislation requires that they now adhere to a fiduciary duty to act in the best interest of a customer without regard to the financial or other interest of the person of firm providing advice.

This directive is very similar to the grant of authority provided to the Nevada Securities Division with regard to their implementation of Nevada’s state-based fiduciary law that was enacted in July of 2017. The proposed rules in Nevada do not exempt any advice given to plan sponsors or participants in ERISA-covered retirement plans. New Jersey is also engaged in a regulatory project that would subject financial service professionals with a fiduciary standard of conduct with respect to recommendations of investments.

The American Retirement Association is actively engaged with these state regulators to inform them that advice to plan sponsor and participants to 401(k) and other tax qualified retirement plans are already subject to a federal fiduciary standard under the Employee Retirement Income Security Act that could come into conflict with these new state standards.

Andrew Remo is the American Retirement Association’s Director of Legislative Affairs.