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Newly proposed rules widening the US Labor Department’s umbrella of strict fiduciary investment advice standards are pressuring employer plan sponsors to reevaluate the kinds of businesses they hire on behalf of workers.

The proposed rules would discard much of the original 1975 legal test used to determine investment adviser fiduciary status, instead relying on an analysis of advisers’ business model and a “reasonable understanding” about the nature of their client relationships. The proposal largely rejects legal disclaimers companies use to skirt fiduciary liabilities, focusing on the kinds of advice an investor or a plan believes they are getting.

“It’s a key point,” said Matthew Eickman, national retirement practice leader for Qualified Plan Advisors, which specializes in plan-level fiduciary consulting, fee benchmarking, and investment advice. “Many plans are shocked to learn that advisers aren’t already fiduciaries.”

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