The Department of Labor (DOL) proposed to extend the implementation of its fiduciary rule for retirement advisors by a year and a half.
The rule went into effect June 9, but only in a transition phase. Full implementation was set to go into effect Jan. 1, 2018. The DOL has now proposed to extend the implementation to July 1, 2019.
“The primary purpose of the proposed amendments is to give the Department of Labor the time necessary to consider possible changes and alternatives to these exemptions. The department is particularly concerned that, without a delay in the applicability dates, regulated parties may incur undue
expense to comply with conditions or requirements that it ultimately determines to revise or
repeal.
The so-called fiduciary rule requires financial advisers to act as fiduciaries and serve in the best interests of their clients in retirement accounts. Several bills have been introduced in Congress to change the fiduciary standard.
The Financial Services Roundtable (FSR) came out in support of the DOL’s decision to delay.
“A rule requiring financial professionals to act in the best interest of their customers is just common sense, but such a rule should not involve miles of bureaucratic red tape,” Tim Pawlenty, chief executive officer of FSR, said. “A reasonable delay will allow proper coordination between the SEC and DoL, resulting in an improved ‘best interest’ rule that will benefit even more savers than the rule currently proposed by just the DoL.”
FSR conducted a survey that found that the currently proposed fiduciary rule will lead to fewer retirement savings choices for many Americans. A large portion of the poll’s respondents (50 percent) report the rule is restricting them from serving their clients’ best interests. In addition, 75 percent of respondents who reported their typical clients have starting assets under $25,000 indicate they will take on fewer small accounts due to increased compliance costs and legal risks.
Further, FSR believes the Securities and Exchange Commission (SEC) has the necessary expertise to take the lead and update a best interest standard that should apply to all financial advice.