The Department of Labor proposed extending the implementation of its “fiduciary rule” on investment advice for retirement planning by 60 days from the original launch date of April 10.
The DOL will accept public comment on the extension date for 15 days effective March 2.
The controversial rule would expand the definition of fiduciary. It would impact financial advisers providing retirement savings advice and essentially require them to put their clients’ best interests first. It seeks to require that advisers disclose their fees and commissions to clients in order to avoid conflicts of interest, which opponents argue would raise costs and make retirement planning more difficult for investors.
If the delay is approved, implementation would be pushed off until June 9.
The ruling was challenged in court by a group of organizations – including the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute and Securities Industry and Financial Markets Association (SIFMA) – but a Texas federal judge upheld the DOL rule earlier this month.
On Feb. 3, President Donald Trump directed the Labor Department to delay implementation of the rule for further review “to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”
Kenneth Bentsen, SIFMA president and CEO, said, “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.”
“We are already seeing the negative consequences of the rule on the marketplace with some firms announcing that they will no long offer certain products, others no longer offering any IRA brokerage accounts, firms reducing web-based financial education tools, and others announcing that advice to clients with lower balanced accounts will be discontinued,” Bentsen added.
U.S. Rep. Maxine Waters (D-CA), ranking member of the Committee on Financial Services, does not support the extension.
“I am deeply disappointed that the Trump administration has decided to once again put Wall Street ahead of Main Street by delaying a crucial protection for seniors and Americans planning for retirement,” Waters said.
The fiduciary rule would stop unscrupulous financial advisers from providing misleading financial advice to line their own pockets, she said.
Dale Brown, president and CEO of the Financial Services Institute, said the delay is a necessary first step and that it will continue working to repeal and replace the rule.
“FSI has supported a uniform fiduciary standard since 2009 – before Dodd-Frank became law,” Brown said. “We stand ready to work with the president and his administration to put in place a best interest standard that protects investors, while not denying quality, affordable financial advice to those who need it most.”