Major parts of the Labor Department fiduciary rule will kick in June 9, but how much of the rest of it will survive remains uncertain.
Labor Secretary Alexander Acosta announced in a
Wall Street Journal oped Tuesday that the initial implementation date of the rule, which has already been delayed from April 10, will not be extended beyind the June date. He also said that the agency will gather more public comment for a reassessment of the rule that President Donald J. Trump ordered in February. That review could lead to an overhaul of the regulation.
Mr. Acosta's decision not to push the implementation deadline beyond June 9 is a victory for supporters of the rule, which will require financial advisers to act in the best interests of their clients in retirement accounts. On that date, two provisions will become applicable. One expands the scope of advisers who must act as fiduciaries and the other establishes impartial conduct standards.
Rule opponents wanted the entire rule delayed during the agency's review, which is likely to last until the rule's final implementation date of Jan. 1.
"We won for now," said Barbara Roper, director of investor protection at the Consumer Federation of America. "We're in a better position than I thought we would be in February. I'm still concerned that key provisions could be gutted."
In his oped, Mr. Acosta foreshadowed revisions and used language that is similar to the rhetoric of financial industry opponents, who say that it is too complex and costly and will make advice too expensive for investors with modest assets.
"He makes it very clear that this rule is flawed and that there are changes necessary to make it work for the marketplace and consumers," said Jill Hoffman, vice president of government affairs at the Financial Services Roundtable.
The Securities Industry and Financial Markets Association indicated that it wants to upend the rule.
"We hope that upon the department's completion of its wholesale rule review, they will conclude, as we believe the evidence clearly shows, that dramatic and fundamental changes are appropriate and necessary," SIFMA president and chief executive Kenneth E. Bentsen Jr. said in a statement.
But Blaine Aikin, executive chairman of Fi360, a fiduciary training and accreditation firm, said that no matter what happens to the rule it must retain the enforcement mechanism of the so-called best-interest contract and continue to cover individual retirement accounts.
"Maintaining the core principles of the rule is vital," Mr. Aikin said on the sidelines of the Fi360 annual conference in Nashville, Tenn. "There can be refinements but not fundamental changes."
In framing the review in his oped, Mr. Acosta's used tropes from industry criticisms of the rule, such as claims that it would limit advice and lead to an increase in litigation.
"We agree with the guiding principles Secretary Acosta outlined," Financial Services Instititue president and chief executive Dale Brown said in a statement.
That's what concerns Ms. Roper.
"As reconsideration goes forward, I hope changes will be based on what is actually happening in the market and not just on mindless repetition of industry talking points," she said.
For now, supporters of the rule are celebrating that the initial implementation date will stick at June 9, even as the DOL indicated in a set of
frequently asked questions released on Monday that the deadline for full implementation may slip past Jan. 1.
"It gives us a chance to move forward with certainty and with real protection for investors," Mr. Aikin said. "It makes it hard to argue that the rule is unworkable."
