DOL Proposes 60-Day Extension in Fiduciary Rule Applicability

The DOL is proposing a 60-day delay of its fiduciary rule, reports ThinkAdvisor.

The measure, titled "Conflict of Interest Rule - Retirement Investment Advice" but commonly referred to as simply the "Fiduciary Rule", defines investment advisers as fiduciaries, meaning they must trade and adjust portfolios as if their customers' assets were their own, and seeks to avoid conflicts of interest by mandating that the advisers disclose all of their fees and commission earnings to clients. There will also be a 45-day window to submit comments or information related to other aspects of Trump's memorandum.

President Trump's order on February 3 that the agency review the fiduciary rule has confused brokerage firms, some of whom fear legal liability from violating the rule's tight exemptive relief if they offer commission retirement accounts that are product-oriented.

Implementing a rule that could ultimately be revised or revoked "could unnecessarily disrupt the marketplace, producing frictional costs that are not offset by commensurate benefits", wrote Hauser, a key backer of the rule that his unit created over more than five years during the Obama administration.

The controversial rule would expand the definition of fiduciary.

The Labor Department said the 60-day delay would give it time to complete the evaluation requested by Trump. He said it would be hard for the department to initiate modifications or rescind the rule "without the direction of a secretary". "They say that some brokers may decide to stop offering certain products that they fear would face more scrutiny under the rule, a shift that would leave some investors with fewer options".

Once the proposed delay is published, the Labor Department will take comments for 15 days about the possible effects of the delay. The delay will provide the DOL additional time to determine the rule's full impact on consumers, and, if necessary, issue a new proposal for revising or rescinding the rule.

  • Joe Gonzales