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Published: Sun, May 28, 2017
Economy | By Melissa Porter

DOL Fiduciary Rule Arrives June 9...Will It Survive?

DOL Fiduciary Rule Arrives June 9...Will It Survive?

The regulation, known as the fiduciary rule, requires investment brokers who handle retirement funds to put their clients' interests ahead their own compensation, company profits or other factors.

In a new op-ed for the Wall Street Journal, Labor Secretary Alexander Acosta announced that he will allow key Obama-era regulations created to protect individuals from unscrupulous financial advisors to go into effect. While the new definition takes effect June 9, additional conditions - such as specific disclosures and representations - are not required until January 1, 2018. "ADISA will work with our members to ensure that all involved understand their responsibilities under the revised rule and accompanying exemptions, and will continue to work with the Department, Congress and the SEC to ensure that all applicable rules and regulations create a level playing field for financial professionals and serve the best interests of retirement savers".

The big question on many minds is likely to be found in Question 4, which asks: "Will the Department make additional changes to the Fiduciary Rule or exemptions?"

"Trust in Americans' ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule". President Trump originally ordered the rule be delayed from the original April 10 effective date, after which he also ordered a review of the rule.

Several consumer groups would go after the DOL if it again delays the rule, Micah Hauptman, financial services counsel at the Washington-based Consumer Federation of America, tells Bloomberg.

U.S. President Donald Trump speaks about the apparent attack in Manchester England before his remarks alongside Palestinian President Mahmoud Abbas after their meeting at the Presidential Palace in the West Bank city of Bethlehem
President Trump. Thomson Reuters

Acosta didn't rule out further review of the rule, however, noting that, "The Labor Department has concluded that it is necessary to seek additional public input on the entire fiduciary rule, and we will do so".

Pamela Banks, senior policy counsel for our colleagues at Consumers Union, said in a statement that the "common-sense changes are long overdue", but remained cautious about the rule's future. The regulation is meant to help cut down on conflicts of interest in retirement advice.

They were created to update regulations on financial advisers that haven't been changed since most workers received pensions rather than self-directed Individual Retirement Accounts and 401 (k) retirement plans. But soon after, the rule was declared legal by a federal court that stated the DOL did not overstep its bounds in creating it. Likewise, a lawsuit could invoke the APA if the DOL issues a proposed rule to suspend or revoke its rule, according to Sweeney. "We are encouraged by today's announcement, but we urge the Department of Labor to resist industry-led efforts to diminish or weaken the rule and the important protections it provides".

"We urge full compliance and enforcement in order to protect against the harmful practices that threaten the retirement security of millions of workers and retirees", she said.

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