Trump to Halt DOL’s Fiduciary Rule
After weeks of speculation about the fate of the Department of Labor’s fiduciary rule, president Donald Trump will sign an executive action halting it, the Wall Street Journal reports.
Around noon Friday, Trump is expected to issue a memorandum requesting the labor secretary rescind or revise the rule, which requires retirement brokers to put clients’ interests first and was scheduled to go into effect in April, Gary Cohn, White House National Economic Council director, tells the Journal. When the paper asked if the rule would be repealed, Cohn nodded his head and said it’s bad for consumers. But Andy Puzder, the Trump nominee to head the DOL, has yet to be confirmed by the Senate, the paper writes.
Cohn, who gave up his post as president of Goldman Sachs to join Trump’s administration, tells the Journal that under the rule companies would be forced to offer the lowest-priced products even if they’re not optimal for their clients. Meanwhile, Trump will sign the memorandum on the same day he’s meeting with JPMorgan CEO Jamie Dimon, among other corporate executives, the paper writes.
As part of Friday’s executive action, Trump also plans to direct the Treasury secretary to scale back rules put into place by the 2010 Dodd Frank law, which Trump had said makes it harder for consumers to get credit and slows the economy, the Journal writes. Steven Mnuchin, Trump’s nominee to head the Treasury, will meet with the Financial Stability Oversight Council to help determine which parts of the law to target, Bloomberg writes.
While industry groups, banks and insurance groups have been fighting the fiduciary rule, several brokerages have announced that they will go through with changes they planned to comply with it, the news service writes.
LPL Financial will go forward with the “majority” of the planned changes whether the rule gets implemented or not, Bill Morrissey, managing director of business development at the firm, told Bloomberg before Trump’s executive action was disclosed.
Last month, Morgan Stanley announced it will cut fees and make other client-friendly changes regardless of whether the rule was implemented.
In November, Merrill Lynch said it plans to stop offering commission-based retirement accounts even if the fiduciary rule is repealed.