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Retirement Planning > Retirement Investing

Trump's Team 'Will Not Have Final Say' on DOL Fiduciary Rule: Lawyer

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The Labor Department’s fiduciary prohibited transaction exemption to align with the Securities and Exchange Commission’s Regulation Best Interest has landed at the Office of Management and Budget for review.

Labor sent its fiduciary PTE, Improving Investment Advice for Workers & Retirees Exemption, to OMB on Tuesday.

Steve Saxon, partner at Groom Law Group in Washington, told ThinkAdvisor in a Wednesday morning interview that he expects OMB’s review of the fiduciary PTE to be “very short,” and completed within a matter of days. It could be “less than a week,” Saxon said.

Because the rule is designated as “economically significant, that could impact the overall [review] process” at OMB, Saxon added.

If the Biden administration “wants to do something with the exemption, he may just tweak it some, [and] Biden can revoke” it, Saxon said.

Brad Campbell, partner at Faegre Drinker in Washington, told ThinkAdvisor that the timing of the final rule landing at OMB “presents challenges for the Department.”

However, Campbell said, Labor’s proposal “was identified as a significant rule, which normally requires 60 days before it can become effective. That would put the effective date after Inauguration Day, providing opportunities for the incoming administration to try to delay or rescind the exemption.”

Either way, explained the former head of Labor’s Employee Benefits Security Administration, “we will all be waiting eagerly to see the final text once released, and given OMB’s recent history of moving DOL regulations very rapidly, that may happen within the next two weeks.”

More Views on Final Rule

Fred Reish, partner at Faegre Drinker in Los Angeles, added that “it is now impossible to publish the final rule in time to prevent the Biden administration from reviewing and revising it.”

Developing the rule was slowed down at Labor, Reish said, “by the significant negative reaction from the financial services sector, and particularly from broker-dealers and insurance companies.”

Due to these concerns, the DOL “decided to hold public hearings and, I assume, to rewrite parts of the rule.  Those steps added weeks, if not months, to the timeline. As a result, the Trump administration will not have the final say on this rule,” he explained.

George Michael Gerstein, partner at Stradley Ronon in Washington, added in a separate Wednesday morning email to ThinkAdvisor that the Biden administration will likely look “very closely” at the PTE.

“It’s a tie-in with Regulation Best Interest, already in effect, and market developments may allow this exemption to see the light of day,” Gerstein said.

Labor’s rule “appears to be on a path to being finalized before the end of the Trump administration,” added Dan Zelinski, spokesman for the Insured Retirement Institute.

“With the modifications we [IRI] provided in our comments, a final rule can provide appropriate protections for retirement investors while also preserving retirement investors’ access to investment advice and alternative business models in a manner consistent with Reg BI,” Zelinski said.


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