Halt of Fiduciary Rule Could Mean More Work for Plan Sponsors

Industry experts have opined that if the DOL fiduciary rule is rolled back, it would actually put more pressure, not less, on plan sponsors to ensure they are meeting their own required duties.

By John Manganaro | February 03, 2017
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Despite reports that the Department of Labor (DOL) was ordered by President Donald Trump to delay the implementation of the fiduciary rule by six months, the final memo to the agency did not contain such an order.

In the memorandum, Trump says the DOL fiduciary rule may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of his administration.

The memo directs the DOL to examine the fiduciary rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice. As part of this examination, he ordered the agency to prepare an updated economic and legal analysis concerning the likely impact of the fiduciary rule, “which shall consider, among other things, the following:

  • Whether the anticipated applicability of the Fiduciary Duty Rule has harmed or is likely to harm investors due to a reduction of Americans' access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice;
  • Whether the anticipated applicability of the Fiduciary Duty Rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and
  • Whether the Fiduciary Duty Rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.”

Trump goes on to say that if the DOL makes an affirmative determination as to any of the considerations or if it concludes for any other reason after appropriate review that the rule is inconsistent with the priority of Trump’s administration, then the DOL should publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and as consistent with law.

Of course, this review could lead to a delay in, or even halt of, implementation of the rule.

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