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In 1975, the Department issued a 5-part regulatory test for “investment advice” that gave a very narrow meaning to this term. Under the regulation, before a person can be held to ERISA’s fiduciary standards with respect to their advice, they must (1) make recommendations on investing in, purchasing or selling securities or other property, or give advice as to their value (2) on a regular basis (3) pursuant to a mutual understanding that the advice (4) will serve as a primary basis for investment decisions, and (5) will be individualized to the particular needs of the plan. An investment adviser is not treated as a fiduciary unless each of the five elements of this test is satisfied for each instance of advice.

Investor Responsibility Research Center (IRRC) founded in 1972