With the announcement late Monday by Labor Secretary R. Alexander Acosta that the June 9 compliance date for the Obama administration’s fiduciary rule will remain in place, almost all financial advisors will become fiduciaries on that date.
“I do think it’s the right move,” Blaine Aikin, executive chairman of fi360, told ThinkAdvisor during a Tuesday morning interview at the fi360 annual conference in Nashville. “I think the justification is very consistent with what we’ve talked about at the conference over the last several days: that had [Labor] tried to delay at the last minute again, almost certainly what it meant would have been litigation, which would have been very contentious and kept us in a state of limbo.”
With the June 9 compliance date sticking, “anyone that is providing that personalized investment advice to their retirement client is under the fiduciary standard,” Aikin said.
But fiduciary rule opponents were quick to weigh in with their disappointment with Acosta’s decision to not further delay the rule’s compliance date.
“We have opposed the DOL fiduciary rule because of our belief that it will push the cost of retirement advice and planning services out of the reach of Main Street investors. Unfortunately, the DOL’s decision not to further extend the DOL fiduciary rule’s applicability date will make those concerns a reality,” said Dale Brown, president and CEO of the Financial Services Institute, in a statement.
Ken Bentsen, CEO of the Securities Industry and Financial Markets Association, said that while SIFMA is “disappointed that the Department of Labor has chosen not to further delay the rule until the Department has completed a review of the entire rule’s impact on investors, we appreciate Secretary Acosta’s recognition of the rule’s negative impact and his desire to seek public input.”
Upon the department’s completion of its “wholesale rule review,” Bentsen continued, SIFMA hopes Labor “will conclude, as we believe the evidence clearly shows, that dramatic and fundamental changes are appropriate and necessary.”
SIFMA, Bentsen continued, “has long supported the creation of a best interest standard for brokers who provide personalized investment advice, and we continue to believe that the [Securities and Exchange Commission] is the appropriate regulator to do so. We look forward to working with the administration and Congress on the creation of a best interest standard.”
Chip Anderson, executive director of the National Association for Fixed Annuities, also expressed disappointment “that Secretary Acosta did not move back the June 9 deadline,” adding that NAFA “remains strongly of the view that implementation of the fiduciary rule prior to the re-examination by the DOL is not consistent with the president’s Executive Memo of Feb. 3.”
Public Comments ‘Very Reasonable’
Labor is also being “very reasonable” in seeking public input on what changes need to be made to the rule, Aikin said during the interview, and “strongly encouraged” audience members during his Tuesday morning remarks to submit comments.
As Acosta said Monday in an op-ed in The Wall Street Journal: “The Labor Department has concluded that it is necessary to seek additional public input on the entire fiduciary rule, and we will do so.”
Getting public feedback “gives us an opportunity to make the rule better,” Aikin said. “I think the places where there could be improvements are largely in those things that were being re-examined during the transition period. I think the DOL acted very reasonably and responsibly by maintaining the fiduciary principles associated with the impartial conduct standards — they are pushing back for more consideration on the more prescriptive parts.”
Aikin noted that any attempts to kill the rule after the comment period expired would not “be a positive development for investors or for the profession of advice or certainly not for the reputation of financial services firms — it would be met with litigation.”