Fiduciary Rule To Take Effect June 9, Labor Secretary Says

Kathleen Mckinney
May 24, 2017

In an op-ed published in the Wall Street Journal on Monday, DoL Secretary Alexander Acosta said the Department made a decision to move forward with the partial rule after it "carefully considered the record in this case" and determined there was no legal basis for further postponement.

The rule requires retirement advisers to always act in the best interest of their clients.

Acosta wrote that the Labor Department couldn't find a legal basis to delay the "fiduciary" rule beyond June 9, the end-date of a review designated by President Trump via executive order earlier this year.

But in his Wall Street Journal opinion piece, Acosta also writes it's necessary to get more public input on the rule, which he calls a "controversial regulation" - and that the DOL still plans to follow through on president Donald Trump's directive to review it.

The announcement dashes the hopes of many in the financial services industry who wanted a more substantial delay. "Certainly, it is important to ensure that savers and retirees receive prudent investment advice, but doing so in a way that limits choice and benefits lawyers is not what this administration envisions".

The Labor Department has published a new set of FAQs about the fiduciary regulation, these focused on the so-called "transition period" from June 9, 2017 to January 1, 2018.

SO LONG, BICE?The DOL may be alluding to stripping the best-interest contract exemption, a provision of the rule the industry views as particularly onerous, of its present conditions in place of something "less administratively difficult" if a brokerage uses clean shares with clients, Mr. Humphrey said, qualifying this explanation as an educated guess. "As a result, on June 9, 2017, investment advice providers to retirement savers will become fiduciaries, and the "impartial conduct standards" will become requirements of the exemptions", read a frequently-asked-questions (FAQ) notice that the DOL posted on its website, dated Monday.

Specifically, starting on June 9, firms and their advisers must comply with conditions of the rule if they receive compensation for investment advice in a manner that would violate the prohibited transaction rules, which are created to protect retirement investors from conflicts of interest.

In addition, Secretary of Labor Alexander Acosta spelled out the DOL's plan and his thinking in a Wall Street Journal op-ed article.

Trump ordered a review of the rule on February 3, with White House Press Secretary Sean Spicer calling it "regulatory overreach" by the Labor Department.

Most retirement plan providers have already invested a great deal of money into improving plan communication and education, making every effort to comply with the fiduciary rule's mandate. The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.

The Financial Services Institute, a lobbying group that has vehemently opposed the rule, said it was "disappointed in this latest development".

Other reports by TheDigitalNewspaper

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