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DOL’s Fiduciary Guidance Gives Advisors a Breather

March 17, 2017

The Department of Labor’s recently announced temporary policy on its fiduciary rule should put at ease advisors concerned about compliance, RIABiz writes. But it doesn’t mean they’re off the hook entirely.

The rule, which requires retirement brokers to put clients’ interests ahead of their own, was scheduled to go into effect, at least partially, in April. So there’s wasn’t much cause for concern in the first place, since the provisions that would give investors’ lawyers power to go after advisors weren’t going into effect until 2018, RIABiz writes.

But the guidance announced last week basically says that the DOL isn’t using its power to enforce the rule just yet, according to Jason Roberts, CEO of the Pension Resource Institute. “Essentially, so long as the DOL isn’t enforcing, there is no reason to comply,” he tells RIABiz.

Last week, the agency’s Employee Benefits Security Administration unveiled a temporary policy on how it plans to enforce the rule in case there’s a delay in rolling it out or formally pushing back its implementation date.

The policy followed an announcement earlier this month that the DOL seeks to postpone the rule by 60 days in deference to a February memorandum from U.S. President Donald Trump. EBSA’s policy stipulates it’s not pursuing enforcement actions if there’s a delay to the actual delay.

And, as it happens, there’s such a gap between the scheduled April 10 implementation date and a decision to delay the rule.

What’s more, the DOL would give advisors a “reasonable period” to comply with the rule if it reaches a decision not to delay the rule, according to the policy.

And EBSA left the door open for easing the burden on advice practices even further, RIABiz writes, by saying that it would consider “other temporary relief.”

However, this doesn’t mean that advisors can forget about the DOL’s fiduciary rule altogether, Roberts tells RIABiz.

This “reasonable time” clause for complying with the rule means advisors will need to get everything in order if the rule is delayed by 60 days, and they’ll have to do the same if it’s implemented as scheduled, he tells RIABiz.

By Alex Padalka
  • To read the RIABiz article cited in this story, click here.