Parts of the Fiduciary Rule go into effect June 9, with full implementation on January 1, 2018. You want to bet that will happen on January 1?
Last month Labor Secretary Alexander Acosta, in an opinion piece published in The Wall Street Journal, stated he “found no principled legal basis to change the June 9” implementation date for the Fiduciary Rule.
Acosta’s acknowledgment of the underlying legal principles involved in federal rulemaking does not mean the Department of Labor won’t yet try to overturn the Rule, or to modify it.
The DOL is continuing with its review of the Rule as directed by President Trump to determine if the Rule as written “align[s] with President Trump’s deregulatory goals.” The gist of Acosta’s opinion piece was that changes in the Rule will occur, but law and rulemaking process must be followed.
On June 9, only certain provisions of the Rule go into effect: advisers’ recommendations must meet impartial conduct standards; compensation must be reasonable; and, misleading statements are prohibited.
Full implementation of the Rule is scheduled for January 1, 2018. For the balance of this year, the DOL has stated it will seek no enforcement of the Rule so long as a firm is making a good-faith effort to comply.
Implementing the full Rule on January 1 will have minimal impact on the operations of firms like NWCM. Because we are not registered representatives of a broker/dealer, and as level-fee advisors, we always have been fiduciaries, meaning we put our clients’ interests first. Our compensation is very reasonable compared to industry standards.
Registered reps and insurance agents, however, will be significantly impacted by the Fiduciary Rule come January 1. Investors can expect those opposed to the Rule will continue to pressure the DOL to make changes before the end of the year. They will look for support for their position from Labor Secretary Acosta, who stated in that WSJ article: “This administration presumes that Americans can be trusted to decide for themselves what is best for them.”
Consider this: The President’s Council of Economic Advisors had previously estimated that under current sale practices investors have paid over $17 billion annually in excessive fees. Do Americans know “what is best for them”? Or can the financial industry “trust” that Americans will continue to pay excessive fees?