Retirement plan advisers, providers hit 'pause' on DOL fiduciary rule compliance

The Trump administration review is prompting some retirement plan specialists to hold back on implementing parts of the rule that are vague or challenging

Nov 7, 2017 @ 4:52 pm

By Greg Iacurci

The likelihood of a delay to elements of the Department of Labor fiduciary rule has caused some retirement plan advisers and providers to re-evaluate some of the steps they'd taken or had planned to take to comply with the regulation, a panel of industry executives and legal experts said Tuesday morning.

"At this point, the transition caused us to step back and pause … Everything is up for interpretation, and it's very gray," said Todd Levy, chief investment officer at Ingham Retirement Group, an advisory firm that is also a plan record keeper and administrator.

He called the proposed delay somewhat of a relief due to some compliance aspects with the fiduciary rule, but a challenge in others ways due to a lack of direction.

Promulgated under the Obama administration, the DOL rule broadens the scope of interactions with retirement-plan clients to which a fiduciary standard would apply. The rule partially went into effect June 9, but the Trump administration has proposed to delay major portions of the rule until July 2019.That delay is expected to become finalized in the coming weeks.

One of the parts that would be delayed includes portions of the best-interest contract exemption, the primary enforcement mechanism of the rule, which contains what many rule opponents see as the most difficult elements regarding compliance.

A watered-down version of the exemption, referred to as the "transition BIC," went into effect in June.

"Preliminary decisions were made based on the full scope of the BIC exemption, and when the transition BIC came into effect it lightened the burden of compliance and maybe allowed people to assess their businesses differently," Karen Scheffler, senior vice president and senior ERISA council at AllianceBernstein, said at the 2017 SPARK Forum in Palm Beach, Fla.

The so-called transition BIC requires those providing fiduciary investment advice to adhere to impartial conduct standards, made up of three parts: receiving reasonable compensation for services, providing advice in the best interests of retirement savers, and making no materially misleading statements.

"It's not that people are cutting back on compliance," David Levine, principal at Groom Law Group said. "We're living in a world of 'BIC Ultra-Lite' right now. It's just the impartial conduct standards. And because of that you don't have to be putting all these systems in place."

"It's not that people aren't complying," he added. "[They're not] building systems they won't need," Mr. Levine added.

Mr. Levine described the impartial conduct standards as a "fluffy" set of principles-based (rather than prescriptive) concepts that are leading to a "mishmash" of compliance steps among companies.

"If you ask 20 people what those mean, you'll get 20 different answers, because basically now we're sitting in a world where it's good-faith [compliance]," he added.


What do you think?

View comments

Recommended for you

Featured video


How 401(k) advisers can use 'centers of influence' to grow their business

Leveraging relationships with accounting, benefits, and property and casualty insurance firms can help deliver new business leads for retirement plan advisers.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

SEC advice rule seeks to tighten reins on brokers

The proposed rule puts new restrictions on brokers, but it is still unclear how strongly the SEC is clamping down.

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print