Fiduciary Rule Delay: What Comes Next?

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By Kristen Ricaurte Knebel

Investment advisers got the fiduciary rule delay they asked for, but maybe not the delay they wanted.

The Department of Labor’s final rule, published April 4, delays until June 9 portions of the Obama administration’s regulatory package that aimed to reduce the allegedly conflicted investment advice given to retirement savers. Other portions of the rule are delayed until at least Jan. 1, 2018, while the rule is under a presidentially mandated review by the agency.

That means on June 9 service providers and investment advisers will need to comply with the new definition of the term “fiduciary” and the impartial conduct standards in the best interest contract exemption and the principal transactions exemption. The impartial conduct standards require that investment advice is provided in the best interest of the client, that an adviser will only receive reasonable compensation for advice provided and that statements made regarding compensation and conflicts of interest aren’t misleading.

Though further delay of these provisions is possible, the rule’s language indicates that the DOL doesn’t expect to push the applicability date on those any further. The DOL called these features of the rulemaking project “among the least controversial,” but “not free from controversy or unchallenged in litigation.”

This piecemeal delay is good news for investors, Barbara Roper, director of investor protection at the Consumer Federation of America, told Bloomberg BNA in an April 5 email.

“The rule makes clear that they do not anticipate additional delays of the revised definition and impartial conduct standards,” she said.

What Happens Now

Brian J. Tiemann, a partner in McDermott Will & Emery’s Chicago office, also doesn’t expect that the DOL will push off the June 9 applicability date for those two provisions.

Letting the definition of fiduciary and the impartial conduct standards probably won’t set anyone back in the compliance process as they were already prepared to move forward, Tiemann told Bloomberg BNA April 5.

The final rule indicated that the DOL received 193,000 comments so far—15,000 in favor of the delay and 178,000 opposing the delay—and more comments are still to come. The deadline for comments on the presidential memorandum is April 17.

The regulation’s language seems to suggest that the DOL isn’t interested in fully rescinding the rule, and there is the possibility that there could be changes when all is said and done.

“The guidance that came out leaves open the possibility that as the DOL completes its analysis there could be changes to the rule itself, including the things that take effect in June,” Tiemann said.

Full Delay

The Insured Retirement Institute and the Securities Industry and Financial Markets Association--two major opponents of the fiduciary rule--called for the DOL to fully delay the rule until the review period is completed.

The presidential “memorandum directs a review of the entire rule and its impact, not part,” Kenneth E. Bentsen Jr., the president and chief executive officer at SIFMA said in a statement.

Cathy Weatherford, president and chief executive officer with IRI, said in a statement that IRI was pleased with the delay, but disappointed that the DOL didn’t delay the entire rule until after the review period.

“Without a delay of the additional provisions of the rule set to take effect on June 9, 2017, the Department will not be able to properly assess the harm caused to the retirement savers and the financial services firms that serve them,” she said.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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