What You Need to Know
- Ten industry trade groups expressed concern that many small firms may have been less aware of the Dec. 20 compliance date.
- The date should be extended at least 6 to 12 months, the groups say.
- Some firms are hesitant to adopt material new changes that may need to be revisited soon.
Industry trade groups are urging the Labor Department to extend the Dec. 20 compliance date for its fiduciary advice rule.
The Biden administration allowed the Trump administration’s fiduciary prohibited advice exemption, or PTE, to go into effect in mid-February.
The regulation, called “Improving Investment Advice for Worker & Retirees,” is “broadly aligned” with the Securities and Exchange Commission’s Regulation Best Interest, according to Labor’s Employee Benefits Security Administration.
However, current Labor Secretary Marty Walsh said in mid-June that Labor plans to issue a new proposed rulemaking to update the definition of “fiduciary” under the Employee Retirement Income Security Act. That proposal could come by December.
In a recent letter, 10 trade groups — including the Securities Industry and Financial Markets Association, the Insured Retirement Institute, the U.S. Chamber of Commerce and the Investment Company Institute — asked the acting head of EBSA, Ali Khawar, to extend the temporary enforcement policy at least 6 to 12 months beyond Dec. 20.
The groups “also ask that EBSA pause plans to propose further changes to the rules for investment advice fiduciaries until there is sufficient evidence that further changes are needed,” according to an IRI spokesman.
If Labor does go forward with a new fiduciary rule proposal, the groups said, the temporary enforcement policy should stay in place for a reasonable period of time after that rulemaking is completed.
The groups expressed concern that “many small firms may have been less aware” of the Dec. 20 expiration of the temporary enforcement policy.
“For the larger firms, this has been an ongoing effort that in many cases began months ago by devoting substantial resources toward compliance,” the groups state. “Such resources are not readily available to small firms.”