Recent, substantive actions of the DOL to support the Fiduciary Rule were made by career veterans. Things may be changing pretty quickly.
On February 3, 2017, President Trump ordered the Department of Labor to conduct a review of the Fiduciary Rule (which was to go into effect April 10). In our past blog posts, we expressed concern over the possibility the “review” would gut or kill it. We are disappointed that such important investor protection would fall victim to the Trump administration’s resolve to reduce governmental regulation.
In response to the presidential order, the DOL had postponed the implementation date of the Fiduciary Rule for 60 days.
Although its review is not yet complete, the DOL in a surprise move had taken decisive action to keep the Rule intact for the near-term with a few minor “cosmetic” changes:
The Rule will go into effect June 9, 2017, meaning brokers and insurance agents will now be considered fiduciaries when interacting with investors about their employer-sponsored retirement plans and IRAs!
All must comply with the Impartial Conduct Standards (the essence of the Rule) starting June 9.
Certain transition notices which brokerage firms were to give to clients here in 2017 (and only in 2017) need not be given.
Come January 1, 2018, the Rule as originally conceived is in full effect.
The DOL must still complete its review, and hopes to do so by the end of the year. What will that review yet conclude now that President Trump’s nominee for DOL secretary, Alexander Acosta, was confirmed yesterday by the Senate and assumes control over the DOL? How much influence will career veterans at the DOL now have?
The courts have stymied efforts of opponents to the Rule to modify or scuttle the Rule. Opponents are now focusing their efforts to affect a political solution. In his Senate confirmation hearings, Acosta had not directly responded to questions about his opinion on the Fiduciary Rule. In Costa, opponents may have a powerful ally.
When the DOL first proposed a 60-day delay in the implementation of the Rule, federal regulations required it to seek public comment. The DOL reported receipt of 193,000 comment letters and petitions about the delay. 178,00 responses were supportive of the Rule and asked for no further delay in its implementation. It appears only a small minority of firms and brokers want the Rule gutted or killed. Whose interests are they concerned about?
NWCM finds it encouraging that so many in our industry feel as we do: the interests of the investor comes first.
The special interests against the Rule, though in a minority, are quite powerful. Do they have the ear of Trump administration now that Costa is in charge? Stay tuned.