Risk & Compliance

Labor Dept. Seeks Delay in ‘Fiduciary’ Rule

The delay would give the department more time to evaluate the possible effects of the controversial Obama-era regulation on retirement advisers.
Matthew HellerMarch 3, 2017
Labor Dept. Seeks Delay in ‘Fiduciary’ Rule

The Labor Department is proposing a 60-day delay in implementation of an Obama-era rule on retirement advisers so it can have more time to evaluate whether it harms consumers by limiting their investment options.

President Trump had asked the department to review the so-called fiduciary rule, which is vehemently opposed by the financial industry. It broadly requires retirement advisers to act in the best interest of their clients, barring them from accepting incentives to promote certain funds over others.

The rule was set to go into effect April 10 but earlier this week, the DoL proposed delaying implementation until June 9.

“Absent an extension of the applicability date, if the examination prompts the Department to propose rescinding or revising the rule, affected advisers, retirement investors and other stakeholders might face two major changes in the regulatory environment rather than one,” the proposal said. “This could unnecessarily disrupt the marketplace, producing frictional costs that are not offset by commensurate benefits.”

As The Washington Post reports, consumer groups who support the rule are worried a delay could open the door for opponents to find ways to weaken or eliminate the rule. “Millions of Americans who are trying their best to save and invest for retirement will be hurt by today’s proposed delay,” David Certner, legislative counsel at AARP, said in a statement.

But the Financial Services Roundtable, a Wall Street lobbying group, said the rule “will lead to fewer retirement savings choices for many Americans and we are encouraged the DoL is proposing to delay this rule.”

In anticipation of the rule, some financial firms have lowered fees, introduced simpler fee structures or eliminated commission-based retirement accounts. “The delay will allow the new administration an opportunity to review the rule’s impact on investors and the market, while providing firms additional time to prepare for potential changes to the rule,” said Kenneth Bentsen, president and chief executive of the Securities Industry and Financial Markets Association.

The Labor Department, which is currently without a leader after Andrew Puzder withdrew his nomination, said it would use the delay to collect information on the possible effects of rule.

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