Advocates push to delay DOL fiduciary rule delay; industry waits for likely stall

Only supporters of the DOL rule have met with Office of Management and Budget officials, while industry groups have kept their distance.

While advocates for the Labor Department fiduciary-duty rule make a last-ditch effort to put off its likely delay, financial industry groups seem to be confident that the Trump administration will stall the measure.

Since the DOL sent to the Office of Management and Budget on Feb. 9 a proposal to delay the April 10 initial implementation date of the measure, only advocates have met with OMB officials to talk about the agency’s pending decision on the delay. A listing of meetings on the OMB website shows that all nine of the scheduled talks have been with groups that want to protect the DOL rule, which would require financial advisers to act in the best interests of their clients in retirement accounts.

In the OMB meetings, the proponents of the rule are reiterating that it would protect workers and retirees from conflicted advice that leads to inappropriate high-fee investments that erode savings.

The industry celebrated a Feb. 3 memo from President Donald Trump to the DOL telling the agency to reassess the rule and modify or rescind it if the review finds that investors or firms are harmed. The presidential directive echoed the industry’s assertions that the measure is too complex and costly and would end or limit advice to investors with modest assets. The DOL then proposed the implementation delay, which is expected to be for 180 days.

But rule opponents apparently aren’t compelled to meet with OMB to make their case for the need for the delay.

“The industry must feel that they know the outcome,” said Maureen Thompson, vice president of public policy at the Certified Financial Planner Board of Standards Inc. Ms. Thompson was part of the Financial Planning Coalition’s meeting with OMB on Feb. 14.

Another rule proponent questions whether the industry is remaining silent or talking off the record with OMB.

“We’re willing to go in where the meetings are public,” said Micah Hauptman, financial services counsel at the Consumer Federation of America, which met with OMB on Feb. 16. “If they’re engaging in deals behind closed doors, that calls into question the legitimacy of the process.”

Three industry groups that have led the charge to halt the DOL rule — the Financial Services Institute, the Financial Services Roundtable and the U.S. Chamber of Commerce — declined to comment on why they have not met with OMB so far. A spokeswoman for the Securities Industry and Financial Markets Association was not immediately available for comment.

The OMB has meetings scheduled through this afternoon on the DOL fiduciary-rule delay, which it is likely to approve as early as this week.

Advocates will parse how OMB justifies its decision. They say that rule has already brought down the costs of many investment products and the price of advice, as wirehouses have prepared for implementation. In addition, the rule has won four times so far in industry court challenges.

“Our message to [OMB] was: ‘You have no reason to delay the rule,’” Ms. Thompson said. “If they do delay it, we’ll be interested in seeing their rationale.”

The OMB will have to show its work, according to Mr. Hauptman.

“If the economics aren’t there and if it doesn’t withstand legal scrutiny, they would have a tough time approving a delay, unless it’s a purely political decision,” he said.