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A Seminar Can Be a Fiduciary Act, or There’s No Such Thing as a ‘Free’ Dinner Seminar

A recent blog post by Fred Reish looks at how the recent FAQs on the Department of Labor’s (DOL) fiduciary regulation approach free-meal seminars.

Specifically, Reish highlights FAQ 17, which reads:

Would a free dinner seminar offered by an investment adviser as a means of marketing services or investments to a group of retirees or individuals approaching retirement be a widely attended speech or conference within the meaning of the general communications provision of the rule?

Those who have read the answer to the FAQ now know, of course, that “the Department does not consider such free-meal seminars to be widely attended speeches or conferences within the meaning of the general communications provision,” and that “in the Department’s view, a reasonable person attending such a seminar could view statements by the investment adviser as investment recommendations even if the statements were made to all the attendees.”

While the DOL acknowledges that whether a particular communications at the seminar could reasonably be viewed as a suggestion that the advice recipients engage in or refrain from taking a particular course of action would be a “matter of facts and circumstances,” it seems pretty clear (and Reish notes that in those “free dinner seminars…comments about investments, insurance products, advisory services, or investment strategies may be fiduciary advice.

As for a professions who wants to minimize the risk of being a fiduciary at those meetings, Reish notes that the discussion would need to be about general market data and the professional’s services. He goes on to explain that under the “hire me” discussion in the preamble to the fiduciary rule, one can always recommend oneself and one’s firm without becoming a fiduciary — but he or she cannot recommend specific products, strategies, etc., without becoming a fiduciary.