Obama-era rule on financial advisers to go forward, for now

Glen Mclaughlin
May 24, 2017

The "fiduciary rule" aimed at preventing brokers from recommending inappropriate retirement investments, will take effect on June 9 with no further delays, U.S. Labor Secretary Alexander Acosta said on Monday in an opinion piece in the Wall Street Journal.

Starting next month, retirement savers throughout the USA who work with brokers will face new rules governing how they pay for investment advice. It got delayed 60 days when President Donald Trump directed the DOL to evaluate the Obama-era regulation. The FAB also noted that, "to the extent that circumstances surrounding the applicability date of the fiduciary duty rule and exemptions give rise to the need for other temporary relief, EBSA will consider taking such additional steps as necessary".

"Respect for the rule of law leads us to the conclusion that this (June 9) date can not be postponed", Acosta wrote in an op-ed piece in The Wall Street Journal.

But Puritz says the political landscape has been shifting over the past year, with major industry groups opposing the rule less vehemently than they did in the past.

Opponents of the rule have said that it could reduce investors' choices and would benefit trial lawyers at investors' expense, he writes, adding that Trump's administration "presumes that Americans can be trusted to decide for themselves what is best for them" - a view that puts in question the need for the rule.

"ADISA acknowledges the statements made by Labor Department Secretary Acosta", said ADISA President John Grady, DLA Piper.

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The DOL added, "Many of the most promising responses to the fiduciary rule, such as brokers" possible use of "clean shares' in the mutual fund market to mitigate conflicts of interest, are likely to take significantly more time to implement than what the department envisioned when it set January 1, 2018, as the applicability date for full compliance with all of the exemptions' conditions".

"These common-sense changes are long overdue and simply ensure that financial advisors focus on the consumer's best interest - rather than their own financial interests - as they help plan for retirement", said Pamela Banks, senior policy counsel for Consumers Union, in a statement Tuesday.

However, the full Congress has failed as yet to pass any measures impacting the fiduciary rule implementation, and the new administration took four full months to fill the position of Labor Secretary.

"This decision will make it harder for many Americans to save for a dignified retirement".

However, he stressed that the law is being implemented out of "respect for the rule of law [leading] us to the conclusion that this date can not be postponed", and said "additional public input on the entire Fiduciary Rule" was "necessary" and would be sought. But if you receive any financial advice - including more indirectly, through your workplace retirement plan, for example - you could be protected by the rule. Firms will be given until 2018 to comply with the rule without penalty.

"Under the Obama administration, the Securities and Exchange Commission declined to move forward in rule-making".

Other reports by MaliBehiribAe

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