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Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

DOL fiduciary rule not yet caught up in Trump maelstrom

Speculation mounts as to what is taking administration so long to act

Jan 31, 2017 @ 1:07 pm

By Mark Schoeff Jr.

President Donald Trump has been the disrupter that he promised to be.

He is signing executive orders at a pace that makes former President Obama look desultory. His latest ones — on immigration and the makeup of the National Security Council — have sparked nationwide protests and bipartisan consternation on Capitol Hill.

But what Mr. Trump has not touched — so far — in this maelstrom is a Labor Department regulation that would raise investment-advice standards for retirement accounts.

When Mr. Trump was inaugurated, the financial industry had high hopes that delaying the DOL rule would be one of the first items that the new president addressed. It's now Day 10, and we haven't seen anything.

Last week at the Financial Services Institute annual conference in San Francisco, FSI president and chief executive Dale Brown emphasized that FSI had been in contact with the Trump transition team to ensure that the DOL rule was on their radar.

The organization — which represents independent broker-dealers and financial advisers who face a loss of commission revenue and say that they will not be able to serve some of their clients under the rule — maintains that the administration will act.

“Based on our frequent conversations with officials at the highest level of the new administration, we are confident they share our concerns with the rule and its detrimental impact on Americans' access to retirement advice,” FSI spokesman Chris Paulitz said in a statement. “The president has only been in office for eight business days, and Congress has yet to confirm his nominee to be secretary of the Department of Labor.”

A hearing before the Senate Health Education Labor and Pensions Committee for Mr. Trump's DOL secretary nominee, fast food executive Andrew Puzder, was delayed for a third time on Tuesday, as he completes his paperwork.

Perhaps the Trump administration is waiting for Mr. Puzder to come on board. But Democrats are likely to put up a fierce fight, and a Senate floor vote may not occur until later in February — as the calendar inches closer to the April 10 initial implementation date for the DOL rule.

Alternatively, the Trump administration may be waiting for a ruling in the major lawsuit against the rule in a Texas district court. A delay may be pegged to the legal process, but the courtroom wheels could grind slowly.

What we probably can safely say at this point is that the DOL rule, which became effective last June, cannot be stopped by an executive order. Even proposing a delay likely would require a comment period under the Administrative Procedures Act.

“They may have figured out it is not as easy as some had suggested to delay the rule on 'Day One',” said Barbara Roper, director of investor protection at the Consumer Federation of America.

Yet, there is a sense of gloom surrounding the rule.

“Everything I'm hearing is it's in the ICU and the only thing we don't know is what the cause of death will be,” said Kurt Schacht, managing director of the CFA Institute in New York.

The analogy I like to use, though, has to do with the most popular sport in my home state of Indiana.

The financial industry's effort to stop the rule is coming down to the last minute of a basketball game. So far, they're not driving to the basket. Instead, they're dribbling on the perimeter too much.

Even if they make a bucket as the clock runs out to delay the rule, they're only sending the game into overtime. At that point, we'll have a tipoff to continue play to determine a winner.

This story was updated to reflect another delay in Mr. Puzder's hearing.


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