Financial Advisers Get DOL Guidance on Fiduciary Rule Delay

US Department of Labor

US Department of Labor

Leading investment firms and retirement plan service providers have submitted comment letters to the Department of Labor (DOL) on the proposed 60-day delay of the April 10 implementation of the new fiduciary rule. We've covered this regulation for nearly seven years, and we think advisers deserve better than the perpetual runaround.

Assuming the delay is finalized, and the April 10 applicability date of the regulation is pushed to June 9 - and it could very well be extended beyond that - it's time for the administration to think hard about its endgame.

If the DOL does not issue a delay, the DOL will not initiate an enforcement action against an adviser or financial institution if an adviser or financial institution that is not in compliance on April 10 sends required disclosures and related documents to retirement investors within a "reasonable period" following the decision not to issue a delay. "Firms are approaching the drop-dead date to notify customers of service changes to their accounts because of the rule, which could cause customer confusion and ultimately make retirement savings more hard for many investors". We believe in a best interest standard for brokers providing retail financial advice but that the DOL rule is not the best way to accomplish the task.

Industry plaintiffs in a lawsuit against the rule filed the injunction last Friday and asked the court for a ruling by March 20, InvestmentNews says. However, given the President's memo calling for a review of the rule and the DOL's indication that the rule could change, it makes sense to delay the rule to avoid unnecessary customer confusion and concerns over a rule that could eventually change. No one likes being regulated, and no one likes being taken advantage of. Piling delay upon delay in order to legitimize any review that comes out of that precious time won't prevent future fights that a repeal will surely ignite in the courts, which have to date universally upheld the merits of the rule.

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