Department of Labor Moves to Postpone Fiduciary Rule

Melba UnderwoodMar 04, 2017

"More delays are likely", said Mr. Saxena, given that the Labor Department doesn't yet have a secretary installed.

With regard to President Trump's February 3 Executive Memorandum that directed the Labor Department to essentially reconsider the impact of the fiduciary regulation on investors, retirees, the industry, advice access, pricing and litigation, the Labor Department will be seeking comments for the next 45 days, according to a proposed rule released March 1. "The grant of 60 days will only result in the Department of Labor struggling to undo the fiduciary rulemaking which it has already clearly expressed is beneficial to Americans, and to America itself", Rhoades says.

The fiduciary rule, which aims to protect retirement savers from conflicts of interests, has been more than six years in the making. At least three federal judges have ruled in support of the regulation. The Department of Labor created the rule without a clear understanding of the annuity marketplace and consumers will be more confused then ever unless we clean up the requirements in this rule.

Consumer groups who support the rule are anxious a delay could open the door for opponents to find ways to weaken or eliminate the rule.

During that time, the department said it will collect applicable information on the possible effects of rule, including public comments.

Former President Barack Obama and other Democrats saw the rule as vital to keep some advisers from gaining kickbacks from financial products that came with high fees and cost investors billions, according to the Obama administration. 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. Merrill Lynch, for example, recently indicated that it could walk back aspects of its implementation strategy, including a pledge to cease offering commission-based retirement accounts.

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