On Monday, November 27, 2017, the Department of Labor (DOL)
announced that some key provisions of the fiduciary rule will be extended for
18 months.
The fiduciary rule, in its most basic context, requires
brokers and advisors to act in the best interests of their clients who have
retirement accounts, including IRAs and rollovers from qualified retirement
plans, including 401(k) and 403(b) plans.
The DOL first proposed the regulations in October 2010 but withdrew them
in 2011 after opposition from the financial services industry as well as some
members of Congress. The regulations
were reintroduced in 2015 with the final rule becoming effective June 7, 2016. Compliance with the rules surrounding broker
conduct and disclosure was delayed until April 10, 2017. A transition period for compliance with some
of the provisions was put in place from April 10, 2017 until January 1,
2018. This latest delay will extend
implementation of the enforcement provisions of the rule until July 1,
2019. During this now extended
transition period, fiduciaries will be required to meet the Impartial Conduct
Standards, which requires that they receive only reasonable compensation, make
no misleading statements, and act in their clients’ best interest. Clearly, the path of these regulations has
been arduous and the recent delay only makes it more so.
