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Fiduciary Rule update: the beginning of the end?

Shortly after our first article on the DOL Fiduciary Rule the White House issued an Executive Order that requires the Department of Labor (the "DOL") to revisit the Fiduciary Rule (the "Fiduciary Rule" or the "Rule") and the Prohibited Transaction Exemptions (the "PTEs") that were amended alongside it. President Trump's Executive Order requires the DOL to determine if the rule will adversely affect retirement investors or financial firms. If the answer is yes, the expectation is that the Fiduciary Rule and the related PTEs will not survive as currently written, and the DOL will rescind or revise the Rule.

Since the Executive Order was issued, the DOL has requested that the applicability date of the Fiduciary Rule be delayed by the Office of Management and Budget. The expected length of that delay is 180 days. The DOL would use the time to follow the President's Executive Order and review the Fiduciary Rule as currently written. Namely, the DOL will need to ensure the Rule enables retirement investors to make independent and informed decisions about their retirement investing. The Rule must be revised or rescinded if it is determined to: (1) constrain access to retirement savings options or related financial advice; (2) disrupt the industry in a way that causes a negative impact on retirement investors; or (3) increase litigation costs, or the costs associated with retirement investment services.

Based on these recent developments, it seems increasingly unlikely that the portions of the Fiduciary Rule scheduled to take effect on April 10, 2017 will take effect as planned. Those who expect to be affected by the Fiduciary Rule, as well as those who have already taken steps to comply with the Rule, should keep a close eye on the news in the coming weeks. While financial firms and advisors may feel that they will be able to operate as usual past the April 10 effective date of the Rule, the fast moving nature of this issue could change that assessment at any time. Stay tuned to Foster Swift's blogs and newsletters for future updates, and reach out to a Foster Swift attorney if you believe the uncertainty surrounding the Fiduciary Rule will have an effect on your business.

Categories: Employment, News


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