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Financial advisers got a 60-day postponement of the Labor Department’s fiduciary rule, just days before the rule was set to be implemented.
The April 4 final rule, which pushes the fiduciary rule’s applicability date from April 10 to June 9, allows the DOL to re-evaluate the rule per a memorandum from President Donald Trump. He directed the DOL to re-examine the fiduciary rule’s effect on retirement savers and revise or rescind the rule accordingly.
The DOL also extended by 60 days the applicability dates of the best interest contract exemption and the class exemption for principal transactions in certain assets between investment advice fiduciaries and employee benefit plans and individual retirement accounts.
The 60-day delay is likely to be followed by another one to allow the agency adequate time to fully vet the rule. Many stakeholders asked for a longer delay, arguing that 60 days isn’t enough time to finish a review of the beleaguered rule. The agency got more than 1,000 public comments on the delay. The DOL also will have comments to sift through on the presidential memorandum, which are due by April 17.
The Obama administration’s fiduciary rule aimed to reduce the allegedly conflicted investment advice given to retirement savers.
Several groups, including the AARP, the Certified Financial Planner Board of Standards Inc., the Public Investors Bar Association and the Consumer Federation of America requested meetings with the Office of Management and Budget in the days leading up to the delay to discuss the rule.
On March 10, the DOL issued a field assistance bulletin promising not to enforce the rule during any “gap” period that may arise in the course of re-evaluating it.
During his confirmation hearings, labor secretary nominee Alexander Acosta wouldn’t commit to supporting the rule. When questioned by Sen. Elizabeth Warren (D-Mass.), he deferred to the Trump executive order to all agency heads to review regulations and his specific directive to review the fiduciary rule.
Acosta did give a clue about his feelings on the rule when he commented that it goes “far beyond” addressing the standard of conduct for financial advisers.
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