Congressional Republicans have been urging President-elect Donald Trump to scrap the Department of Labor's fiduciary rule, but financial firms trying to adapt to the rule should not hold their breath.
Mr. Trump has a great deal on his plate between now and next April, when the rule is due to be implemented. The fiduciary rule was not one of the changes he promised to make in his first 100 days in office.
Even if Mr. Trump is inclined to repeal the rule, the process of unwinding it will not be quick or simple. So the safest course is for companies to continue to move slowly to position themselves to accommodate their businesses to the rule, as it could well be implemented next year, at least for a time.
Secretary of Labor Thomas Perez could freeze implementation of the rule pending the appointment by Mr. Trump of a new secretary, but that is considered unlikely. This would be the fairest development though, as it would save companies from the costs of adjusting their business practices to implement a rule that could be repealed or at least amended.
The new administration could seek to repeal the rule, but not until a new secretary of Labor has been confirmed. Because the new rule became effective in June, repeal could require the proposal of a new rule basically saying “never mind,” notice of the new regulation and a comment period — a lengthy process.
(Related read: Federal court rejects NAFA attempt to kill DOL fiduciary rule)
A new Labor secretary, if one is confirmed by April, could decide not to enforce the rule pending a review and the development of a replacement rule, but given the number of cabinet posts that must be nominated and confirmed, that's a big if.
MUST GET PAST WARREN
No doubt Democratic leaders such as Sen. Elizabeth Warren, D-Mass., will fight to prevent repeal, and the bureaucracy that spent years developing the rule will drag its feet, so the outcome probably will be unclear well into next year.
Democratic leaders might have enough votes in the Senate to prevent or delay the confirmation of any nominee for the DOL post who indicates an intention to revise or repeal the rule.
Chances are the fiduciary rule will be implemented in April, and advisory firms will have to live with it for a time. It's best to be prepared.