It’s the “summer of DOL,” says John Gebaur, president of the National Regulatory Service, a compliance consulting firm.
The Department of Labor’s fiduciary rule was finalized in early April with the first compliance deadline set for April 2017.
Financial advisors, broker-dealers and firms are “spending their summer making their specific plans and starting to implement changes,” Gebaur said.
Recently, Gebaur and the NRS have been focused on helping financial firms understand the impacts and helping them plan for the DOL rule. The National Regulatory Service provides technology, education and consulting services to help guide firms’ compliance strategies.
“What we’re seeing is a lot of confusion in the market,” Gebaur told ThinkAdvisor. “That’s not a surprise. We do agree that April of 2017 is pretty aggressive. And the marketplace is concerned about this, obviously … I am not sure some of the biggest providers will have time to do all the technology updates that will be needed. Procedural updates are easy, but changing the technology to support those takes time.”
The industry really doesn’t have “deep understanding even yet” of the rule, Gebaur said, which is only amplified by the outstanding legal challenges facing the rule. The three lawsuits filed in Texas against the Department of Labor’s fiduciary rule has a Nov. 17 date for the federal judge to hear oral arguments from both sides.
“I don’t know anyone that’s making a strong case that any of [the lawsuits] are going to have a great deal of success,” Gebaur said. “They still add to confusion, they add to uncertainty. There’s going to be a CEO somewhere that’s telling their CCO, ‘No I don’t want to do anything until I know it’s absolutely going to happen.’”
Some of the confusion surrounding the rule may also be because the DOL doesn’t have a “deep relationship” with firms, as Gebaur says, as the Securities Exchange Commission or the Financial Industry Regulatory Authority does.
“They have some relationship obviously with [the Employee Retirement Income Security Act, but that’s not the same kind. They’re not out doing examinations of these people,” he said. “This is a really unique situation in that you have a regulator who is not used to being active with certain registrants or markets. And the normal mode of communication and discussion hasn’t really happened.”