One of the most hotly debated questions in the advisory space now that Donald Trump has become president-elect is whether his administration will seek to overturn, repeal or gut certain portions of the Department of Labor’s fiduciary rule.
Advisors, political watchers, lawyers as well as fiduciary advocates are on both sides of the fence, with some saying he’ll appoint a new Labor Secretary that will be willing to scrap the existing rule and issue a new “interim rule,” while still others believe Trump will not make DOL’s rule a priority action item during his first 100 days in office.
The first compliance date with DOL’s rule hits on April 10.
Andy Friedman of The Washington Update thinks that if overturning the DOL rule “is a high priority of the new administration, it will happen one way or another.”
However, he adds, “if taking action is far down the list of priorities, it is possible the new rule could take effect before repeal procedures are finalized.”
Analysts at Washington Analysis say that they believe President-elect Trump will appoint a new Labor Secretary to replace Thomas Perez “early next year who will choose to halt implementation” of the DOL’s rule.
Trump’s new Secretary of Labor will either “seek to simply delay implementation to revisit and review the impact of the fiduciary rule, or will opt to take a more aggressive approach by starting an entirely new rulemaking,” the analysts predict.
Because Labor is an executive branch agency, with the Secretary of Labor being a cabinet-level official who serves at the pleasure of the president, analysts at Washington Analysis say, “We view the next Secretary of Labor as having considerable flexibility in choosing a path forward that does not involve implementing the current fiduciary rule.”
While Trump hasn’t mentioned DOL’s rule, “he has clearly emphasized the need to roll back regulations and halt the creation of new rules,” the analysts continue, and Trump campaign advisor Anthony Scaramucci “promised that Trump would repeal the rule, effectively arguing that it is a fatally flawed rule that inappropriately discriminates against financial advisors.”
Attorney Brian Hamburger of the regulatory consulting firm MarketCounsel, who has been an opponent of DOL’s fiduciary rule, told his clients in a recent letter that a Trump presidency coupled with a Republican Congress “will have an enormous impact on the momentum of the expansion of a fiduciary duty on those who give financial advice.” He expects DOL’s fiduciary rule, he told clients, “to be repealed” prior to April.