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Friday, June 09, 2017

The Fiduciary Rule Era Arrives, Sort of, But Will It Last?

News summary by MFWire's editors

Fiduciary reg day is here, but will it last?

Today, despite backlash from Congress and some trade groups, the Department of Labor's (DoL's) much-fought-over "conflict of interest rule" — better known as the DoL rule (to those outside the retirement plan industry), the fiduciary rule, or the fiduciary reg — starts taking effect via a "phased implementation," scheduled to finish on January 1, 2018. Yet the reg as it stands still faces many challenges in the near future.

Alexander Acosta
Secretary of labor
In the meantime, for fundsters and their wealth management industry allies adapting to the new fiduciary era, Alex Acosta's DoL is offering temporary relief amidst this uncertainty over the rule's long-term fate. The regulatory agency has created a kind of enforcement grace period for those "who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions" between now and January 1.

The reg still faces opposition in Congress. Yesterday the U.S. House of Representatives passed H.R. 10, the Financial CHOICE Act of 2017, which would repeal the fiduciary reg (and roll back parts of the post-financial crisis Dodd-Frank Act).

Also yesterday, Representative Phil Roe (R-Tennessee) introduced the Affordable Retirement Advice for Savers Act (H.R. 2823) and Senator Johnny Isakson (R-Georgia) introduced S.1321, both of which would repeal the fiduciary reg.

On the regulatory front, last week SEC Chairman Jay Clayton issued a request for comment on the fiduciary standard harmonization issue, sparking speculation that Clayton's SEC might work with Acosta's DoL on revising the fiduciary reg.

Indeed, Acosta himself has clearly left the door open on the fiduciary reg's future, and last month he even publicly commented that he hopes Clayton's SEC "will be a full participant" in this process. And Acosta confirms that the DoL's extra review of reg (as ordered earlier this year by U.S. President Donald Trump) is ongoing. Watch for the DoL to issue an RFI on possibly revising, adding more exemptions, or even further delaying the fiduciary reg (by pushing back the January 1 final implementation date).

So stay tuned. The fiduciary reg is here but it may not stay here in this form for long. 

Edited by: Neil Anderson, Managing Editor

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