This Obama-era retirement rule survived Trump

Frederick Owens
May 24, 2017

Labor Secretary Alexander Acosta announced in a Wall Street Journal Op-ed Monday evening that the Department of Labor won't further delay the June 9 effective date for the fiduciary rule, which will greatly expand the definition of "fiduciary" under the Employee Retirement Income Security Act and the Internal Revenue Code.

The rule - also known as the conflict-of-interest rule - will require brokers and advisors to recommend investments that are in the best interests of clients, not merely suitable for them, when they give retirement account advice. It got delayed 60 days when President Donald Trump directed the DOL to evaluate the Obama-era regulation.

"This rule is yet another example of an overly burdensome regulation and exactly the type of regulation President Trump promised to eliminate in order for small businesses to flourish", said Katie Vlietstra, vice president of Public Affairs and Government Relations for the National Association for the Self-Employed, in a statement. But Acosta now says he has found "no principled legal basis to change the June 9 date".

The rule, which was finalized in April 2016 after years of back and forth between federal regulators and the banking industry, aimed to prevent advisors from gouging customers by selling them products that could benefit the advisor financially but may not be in the best interest of the individual.

The Trump administration official ended weeks of speculation as to whether the Department of Labor would again delay implementation, disclosing the agency's intentions in an opinion article in The Wall Street Journal.

"ADISA acknowledges the statements made by Labor Department Secretary Acosta", said ADISA President John Grady, DLA Piper. While the new definition takes effect June 9, additional conditions - such as specific disclosures and representations - are not required until January 1, 2018.

Many Trump supporters and financial advisers were sure to be frustrated as news of the administration's decision spread Tuesday morning.

Trump arrives in Israel in search of 'the ultimate deal'
Trump arrived in Israel from Saudi Arabia, where he basked in the lavish welcome he received from the kingdom's royal family. There has been some consternation in Israel in the run-up to Mr Trump's trip over remarks made by administration officials.

'Click It or Ticket' enforcement period begins Monday
In Orange County, the ticket cost for an adult seat belt violation is $162, with penalties for not restraining a child at $465. Wearing a seat belt is a simple measure that dramatically reduces the risk of severe injury or death in a crash.

Fallen police officers honored during ceremony outside NH statehouse
With the addition of those names, the total number of names inscribed on the memorial is now 273. In 2016, 143 law enforcement officers nationwide lost their lives in the line of duty.

But Acosta also alludes to a to the need for further review of the rule, with no timeline given.

Some provisions will go into effect June 9, including the requirement that financial advisers act in the best interest of their clients.

CFA Director of Investor Protection Barbara Roper says that Acosta's public comments on the rule "simply parrot propaganda from the financial interests with most to gain from a return to a system that allows them to profit unfairly at their customers' expense". That's the date that the DOL's fiduciary rule will kick into effect.

The stocks of publicly traded independent and regional brokerage firms were initially battered by Secretary Acosta's decision to let the rule implementation proceed.

But Consumers Union urged the Labor Department to "resist industry-led efforts to diminish or weaken the rule and the important protections it provides".

The Financial Services Institute, a lobbying group that has vehemently opposed the rule, said it was "disappointed in this latest development".

Other reports by Free-Prsite

Discuss This Article

FOLLOW OUR NEWSPAPER