Why the DOL’s Third Extension on the Fiduciary Rule Is a Big Deal
Financial advisers, brace yourselves: the Department of Labor (DOL) has just requested a third extension for finalizing the much-touted retirement fiduciary rule—pushing the decision deadline out to October 28, 2025. This matters. A lot.
Here’s the breakdown: The DOL’s proposed Retirement Security Rule—also known as the fiduciary rule—is intended to broaden who qualifies as a fiduciary under ERISA by redefining “investment advice.” This rule requires that anyone providing advice about retirement accounts must act in the best interest of the investor, disclose conflicts, and follow stricter standards of conduct.
Originally finalized in April 2024 and slated to take effect by September 23, 2024, the rule is currently paused due to court challenges. The DOL previously requested one extension until June 16, 2025, and now again until October 28, 2025
Why It Matters for Financial Advisers
Uncertainty in Compliance Standards
Under current law—thanks to the longstanding Five‑Part Test—many advisers avoid fiduciary status unless all five conditions are met. These include regular advice, compensation, mutual understanding, individualized recommendations, and use as a primary basis. The proposed rule would significantly expand that scope with a functional test and an automatic fiduciary status trigger.Expanding the Fiduciary Net
The Biden rule broadens ERISA’s reach, especially over IRA rollovers and insurance professionals, who previously lurked in the gray zone.Mounting Legal Risk
With each new extension, advisers remain in regulatory limbo. Better-informed documentation and proactive best-interest practices are your best defense right now
Existing Rules vs. Proposed Rule
The Extension Timeline
Finalized: April 2024
Original Effective Date: September 23, 2024
Earlier Extension Requested: June 16, 2025 (now passed)
Third Extension Requested: October 28, 2025
Bottom Line for Advisers
We’re stalled—but not off the hook. The fiduciary net may be closing in, and once the courts decide, this rule could hasten a new era of compliance risk. Until then:
Audit your advice framework: Are your actions already triggering fiduciary duties under the new rule?
Update your documentation: Keep clear records, fiduciary acknowledgments, disclosures, and adherence to best-interest standards front and center.
Be ready for change: October 28, 2025 may bring clarification—or further extension. Stay vigilant, stay informed.
Stay nerdy, stay compliant, and let's get ready for what comes next.
– The ERISA Nerd