SIFMA sent a comment letter to the Department of Labor (DOL), urging it not to delay its proposed rule to extend the applicability date of its fiduciary rule by 60 days.
“The delay must be implemented post-haste to avoid a potential train wreck for tens of millions of retirement savers,” SIFMA President & CEO Kenneth Bentsen, Jr. said. “Firms are approaching the drop-dead date to notify customers of service changes to their accounts because of the rule, which could cause customer confusion and ultimately make retirement savings more difficult for many investors. The delay will allow the new administration to review the rule’s impact on investors and the market, while avoiding further confusion and disruptions.”
Earlier this month the DOL 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. If the extension is approved, implementation would be pushed off until June 9.
The rule, which would expand the definition of fiduciary, would impact financial advisers providing retirement savings advice by requiring them to put their clients’ best interests first. Advisers would have to disclose their fees and commissions to clients to avoid conflicts of interest, which opponents argue would raise costs and make retirement planning more difficult for investors.
On Feb. 3, however, 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.”
In the March 14 comment letter to the DOL, SIFMA argued that the delay is necessary to properly review the rule as per the President’s directive. The letter said failure to provide a delay in the face of this clear mandate from the President would be irresponsible.
With the DOL’s indication that the rule could change, SIFMA said it makes sense to delay the rule to avoid unnecessary customer confusion and concerns over a rule that could eventually change.
SIFMA also argues that the current cost analysis used by the DOL is flawed and based on incorrect assumptions. A delay will allow time to provide the DOL with updated data and information on the changing products and services, SIFMA said.
SIFMA’s letter finally stated that the delay must be effective before the final rule is published in the Federal Register.