Almost seven years after the Labor Department proposed a rule to limit the conflicts of interest for financial advisors working with retirement accounts, its fiduciary rule for those advisors is finally set to take effect, on Friday, June 9, following a two-month delay by the new administration. More specifically, June 9 marks the first implementation of the rule; final compliance is not due until Jan. 1, but that date, too, could change.
A Request for Information (RFI) from the Labor Department is expected to seek comment on whether another postponement is needed beyond the January full compliance date and whether further exemptive relief for financial firms is in order.
Labor is also reviewing issues that were raised in a February presidential memo and these, too, could be included in the RFI: whether the fiduciary rule reduces access to certain retirement offerings, disrupts the retirement advice industry in a way that may adversely affect investors or retirees or is likely to increase litigation and the prices investors pay to access retirement services.
Earlier this week, Labor Secretary R. Alexander Acosta told a Congressional committee that the Labor Department under the Obama administration did not adequately consider concerns about limiting investors’ options in their retirement accounts when developing the fiduciary rule.
On Thursday, the House passed the Financial Choice Act, which along with replacing the Dodd-Frank Act would overturn the fiduciary rule. That bill isn’t expected to survive the Senate, where it would need some Democratic support to pass.
Also on Thursday, House Republicans introduced the Affordable Retirement Advice for Savers Act, which would repeal the fiduciary rule, and GOP senators introduced a companion bill.
Efforts to change or undo the fiduciary rule worry Jon Stein, the founder and CEO of Betterment, the digital financial advisory firm. If Labor’s review of the rule “leads to a rollback of the previsions going into effect tomorrow, the positive progress represented by the fiduciary rule will be lost,” said Stein in a statement.