Let’s take a deep breath and talk about what is happening at the Department of Labor (DOL). We all waited to see how the Trump administration would handle the Department of Labor Fiduciary Rule that the Obama administration wrote back in 2014. The initial effective date was to go into effect March 2017, but the new DOL kicked the can for 60 days.
Well, June 9th was the big day, and it came and went. The federal government does believe that saving for retirement rates are extremely poor and this ruling was one way to make advisors more accountable with their clients’ money.
There are many parts to the Department of Labor fiduciary rule, but, in principle, the DOL’s definition of a fiduciary now demands that advisors act in the best interests of their clients, and to put their clients’ interests above their own.
The issue now—who is deemed a financial advisor under this rule?
We think this is what we will find out in the next six months and get a definition of the requirements for investment sponsors. While the rule was effective June 9, 2017, there were exemptions that extend the implementation until January 1, 2018. The new Republican DOL now has time to put their stamp on this rule.
The new administration could not end this ruling without an act of Congress. But, right now health care and tax reform are the top two priorities. So, on a certain level, this is Plan B for the administration. The DOL, lead by Alexander Acosta, will now put their stamp on this ruling that has as many supporters as it does dis-tractors.
Labor Secretary Acosta has a full plate so we should not expect much from him until late fall. But, I expect to see drips and drabs of proposals leaked to interested parties in the next few months. I am not saying this is good or bad, it is just the way the system works.
What can you do to stay informed on the department of labor fiduciary rule?
There are credible attorneys and lobbyists that disseminate useful information as it comes out. If you have an opinion, contact your congress person and write the DOL. I still believe there will be a middle ground on this ruling. Any ruling that hurts a specific industry will be challenged.
To be continued…
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