The Department of Labor is selling its new fiduciary rule as protection.

Protection from lawsuits.
Protection through process.
Protection via a checklist.

But strip away the language, and the reality is far more troubling:

👉 This rule is not about reducing litigation.
👉 It is about unlocking new revenue streams for Wall Street and the insurance industry—while leaving plan sponsors holding the liability.

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The Bait: “Follow the Checklist, Reduce Your Risk”

The DOL’s message is simple:

If fiduciaries evaluate:

• fees
• performance
• liquidity
• complexity
• valuation

…then they will be protected.

But even under the rule itself, that protection is weak:

• It is not a true safe harbor
• It is only a rebuttable presumption
• Plaintiffs can still challenge the outcome

So what the DOL is really offering is not protection—it is procedural cover.

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The Switch: Open the Door to High-Fee, Opaque Products

While promising protection, the rule simultaneously:

• Encourages alternative investments in 401(k)s
• Channels those investments into state-regulated CITs
• Facilitates inclusion of annuities and insurance products

These are not low-cost index funds.

These are:

• Private equity
• Private credit
• Insurance-wrapped products
• Spread-based annuities

👉 In other words: the highest-margin products in the entire financial system.

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Why Wall Street and Insurers Win Immediately

This rule creates an immediate economic shift:

💰 More complexity = more fees

• Private markets → higher management fees
• CITs → less fee transparency
• Annuities → hidden spreads (often 100–300+ bps)

💰 Less transparency = less pricing pressure

• No SEC disclosure regime
• No daily pricing discipline
• No meaningful benchmarking

💰 Faster revenue recognition

• Fees and spreads are earned today
• Risks are borne later

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Translation:

👉 Wall Street and insurers get paid now
👉 Participants take the risk later
👉 Plan sponsors absorb the liability when things go wrong

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CITs: The Perfect Revenue Vehicle (and Litigation Time Bomb)

The rule effectively pushes plans into Collective Investment Trusts (CITs).

Why?

Because CITs allow:

• Mixing of public and private assets
• Limited disclosure
• State-level oversight instead of SEC regulation

And here’s what most fiduciaries—and participants—don’t realize:

👉 Many CITs are regulated at the state level (PA, NH, MD, etc.)
👉 That fact is often buried in fine print
👉 Underlying holdings are frequently undisclosed or poorly understood

Wall Street Journal Exposes Target Date CIT Corruption — Opens up Fiduciary Litigation

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That’s Not Just a Disclosure Problem—It’s a Legal Problem

Because once litigation begins, everything changes.

Discovery will ask:

• What regulator governs this CIT?
• What assets are inside it?
• Are any affiliates involved?
• How are values determined?
• What compensation is embedded?

And under Cunningham v. Cornell:

👉 If a party in interest is involved, the burden shifts

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One Hidden Conflict Can Blow Up the Entire Structure

This is where the DOL’s rule becomes dangerous.

Inside these CIT-based target date funds, you may find:

• Affiliated private credit funds
• Insurance general account exposure
• Revenue-sharing arrangements
• Spread-based annuities

If any one of those components is found to be a prohibited transaction:

👉 The entire structure becomes subject to challenge
👉 Damages can follow
👉 Fiduciaries—not providers—are on the hook   https://commonsense401kproject.com/2026/04/03/dol-401k-fiduciary-rule-enables-accounting-fraud/

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The Real Risk Shift: From Providers to Plan Sponsors

Wall Street and insurers are insulated:

• They design the products
• They control the disclosures
• They collect the fees

But they are not fiduciaries.

Plan sponsors are.

So when things go wrong:

👉 It is not the product manufacturer that gets sued
👉 It is the plan committee

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Morningstar Already Admits the Questions Aren’t Answered

Even industry observers acknowledge:

• Valuation concerns
• Fee opacity
• Liquidity risks
• Structural complexity

These are not technical issues.

These are the exact elements plaintiffs’ attorneys litigate.  https://www.morningstar.com/alternative-investments/private-investments-401ks-we-still-have-questions

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Bottom Line

The DOL claims this rule protects fiduciaries.

But the real structure is clear:

Wall Street and insurers:

• Gain new access to 401(k) assets
• Increase fees and spreads
• Face limited transparency requirements

Participants:

• Bear higher costs
• Take on opaque risks
• Lose visibility into their investments

Plan sponsors:

• Assume fiduciary responsibility
• Face increased litigation exposure
• Rely on a “checklist defense” that will not hold up

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This rule isn’t a shield.

It’s a handoff:

👉 Profits go to Wall Street and insurance companies
👉 Risk goes to participants
👉 Liability stays with plan sponsors

And when the lawsuits come—as they will—

the checklist won’t save anyone.