Plan sponsors need to pay attention to a new Department of Labor rule redefining fiduciary investment advice. It became effective on June 9. The rule expands the acts that are considered investment advice under ERISA, and is changing the obligations and status of financial advisors and other plan service providers. Interesting, you say, but what does it have to do with me? Simply this: while the rule imposes new requirements on your service providers, it also requires you to pay attention. Here’s how:

1. Some of your service providers were not fiduciaries before June 9, but now they are. You need to understand what their new role is, how this changes their services, how it changes their compensation and what new conflicts of interest they may have. And this means you may (or should) be getting new disclosures or new service contracts. As the plan sponsor, you’ll need to review these materials and make certain decisions: is the provider capable of providing fiduciary services? Does the arrangement with the provider continue to serve the interests of the plan and participants? Is the compensation reasonable?

2. Recommendations to participants about taking a distribution from the plan and rolling it over to an IRA are now fiduciary advice. This requires an advisor to engage in an analytical process before making a recommendation. And this may mean recommending that a terminating employee leave his account in the plan. This isn’t a bad thing. It doesn’t expand or change the fiduciary duty you, as plan sponsor, owe to that participant versus the other participants who continue to be your employees. They’re all participants. But it does mean you should examine a few key issues: Does the plan give non-employee participants easy access to their funds on a periodic basis? Can the plan recordkeeper handle making such distributions? Is the cost charged to the participant for such distributions reasonable?

3. The concept of education has also been modified somewhat. This means you’ll need to review how your service provider is providing education and whether it steps over the line and turns into fiduciary investment advice. And if so, it raises all the same questions we listed in the first item above.

This isn’t a complete list. Our goal is to highlight the fact that as the rules change, you need to pay attention and look to see how the changes affect the plan and your participants. Your duties and the way you carry them out remain the same—that is, you need to engage in a prudent analytical process and act in the interest of the participants—but the issues you look at may be different today from those you looked at last year.