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Regulation and Compliance > Federal Regulation > DOL

Spending Bill Rider Would Delay DOL Fiduciary Rule by Adding Comment Period

By Melanie Waddell

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Lawmakers are attempting to attach a rider to the omnibus spending bill that would require the Department of Labor to publish its fiduciary rule for another comment period before finalizing the rule.

The Financial Planning Coalition told members of Congress in a Dec. 7 letter, however, that ”vigorously advocating for a rider on the year-end spending bill … may sound harmless, but it is not.” Adding another comment period ”will run out the clock on this Administration’s ability to promulgate a final rule, which will as a practical matter defeat the rule.”

Meanwhile, House lawmakers said late Friday that they plan to introduce before Congress breaks on Dec. 18 their bill based on a “declaration of principles” that would be an alternative to the DOL’s rule to change the definition of fiduciary on retirement accounts.

The group of lawmakers drafting the principles — which includes Reps. Phil Roe, R-Tenn.; Richard Neal, D-Mass.; Peter Roskam, R-Ill.; and John Larson, D-Conn. — may attempt to get their bill attached to the omnibus spending bill as well. The lawmakers said in a Friday statement that they still have a “few details to finalize,” on their legislation, and that they are “optimistic” they will introduce the bill before Congress breaks for the holidays.

The lawmakers said their legislative proposal reflects “the principles we believe will help Americans save for retirement.” Growing bipartisan interest in DOL’s rulemaking “demonstrates the continued concerns many have with the department’s approach and the need for Congress to offer a responsible solution.”

But wheeling and dealing on the “huge” omnibus spending bill likely won’t get done by the Dec. 11 deadline, notes Greg Valliere, chief global strategist at Horizon Investments, in his Monday commentary. The new deadline, he said, will be extended to Dec. 18.

Riders attached to the spending bill are said to include one to defund the DOL’s rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, but that rider is “a long shot” at actually being passed, Dale Brown, president and CEO of the Financial Services Institute, told ThinkAdvisor in a recent interview. “That’s a reflection of the broader political environment.”

While “there’s a possibility in the next 10 days that a CR will include a rider” to defund DOL’s fiduciary rule, “it’s also very likely that we’re waiting for next spring” for the final rule to come out, Brown said.

Meanwhile, CLS Investments, LLC, a third-party money manager and a leading manager of exchange traded fund portfolios, along with regulatory consulting firm MarketCounsel, released Monday findings from their joint survey of more than 200 independent advisors, which found that while advisors are aware they are fiduciaries, they have a limited understanding of how dramatically the term affects their operations and relationships with clients. The advisors suveyed believe there’s a possibility that the DOL fiduciary rulemaking will clear up some of the inconsistencies.

The survey found that:

  • 80% of advisors considered themselves to be a fiduciary; however, nearly 37% of overall respondents deemed the term “meaningless” given a lack of understanding of the function;
  • 83% of respondents who identify as fiduciaries completely or partly disagree with the statement “Fiduciary oversight is applied consistently throughout my organization”;
  • Nearly 70% of all respondents said being a fiduciary is not determined by how you are compensated, or how the standard of care is disclosed; 75% of overall respondents say acting solely in a client’s best interest defines a fiduciary; and
  • There is a limited understanding of just how dramatically the term affects advisor behavior and client relationships.

“Investment advisors seem aligned with clients in their confusion over the term fiduciary. This is nothing new, said Brian Hamburger, president and CEO of MarketCounsel, in releasing the results of the study on the first day of the MarketCounsel Summit in Miami.

“But what is interesting here is that advisors seem to be willing to deemphasize that distinction, presumably after determining that the likelihood of further confusion to prospects and clients outweighs the benefits of the term.”

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