It’s been in the works for years, but it may be 2016 before a new fiduciary rule is in effect, and even that’s a bit of a long shot.
“In 2016, we run into an election year,” which means it’s less likely that the political environment will allow regulators to push through one of the more wildly contentious changes in ERISA in years, Groom Law Group Chairman Steve Saxon said Monday at a presentation at the 2014 Society of Professional Asset-Managers and Record Keepers (SPARK) meeting.
Pressure from broker-dealers and others in the financial advice business has helped to stymie the Department of Labor’s efforts to push through changes in how to define a fiduciary.
“The DOL said it has been put off until January 2015. But after talking to a lot of folks, you have to wonder whether it’ll get done by then or even at all,” Saxon said.
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Labor announced in late May that it will re-propose the rule in January 2015, well after November’s midterm elections.
Labor Secretary Thomas Perez told a Senate Appropriations subcommittee in mid-April that the redrafting of the fiduciary proposal “has been slowed down at my direction significantly because we wanted to take a step back [to] listen and learn from everyone.”
“But if it takes six months to get through a comment period,” Saxon said Monday, “and then another six months of hearings, we’re running into an election year (in 2016) and the question is, do we want to do this in an election year?”
Labor Assistant Secretary Phyllis Borzi, who heads the Employee Benefits Security Administration, has been pushing for a new fiduciary standard since 2010, asserting that advisors who work on a commission model have “conflicts of interest” that inherently hurt consumers.