What’s up With That? The DOL Fiduciary Rule Delay

It’s been quite some time since we directly discussed the status and fate of the DOL’s fiduciary rule. A lot has changed over the past eight months, particularly due to the policy positions of President Trump’s administration, and yet, as the DOL and the SEC make decisions on the massively complex regulation, much of the uncertainty over dates and legal challenges remains.

However, since Seismic strives to aggregate information and increase transparency, here’s a quick roundup of relevant news and statements on the landmark law:

“The drastic changes may be softened during the transition period, while we’re waiting to see what the final requirements might be,” Jason Roberts, CEO of the Pension Resource Institute, said to FundFire in August. “It’s very unlikely for firms to make major moves contrary to a major move they’ve already done, to basically unwind that, unless and until they see something proposed and likely finalized that is different than what’s on the books today.”

“They’re all reserving their right to walk back certain decisions they’ve made, but I don’t see them doing that until they can definitely point to something and say ‘we were overly cautious here, and we may be leaving opportunities on the table with this position.’ But you really can’t do that until you know what that alternative is.”

  • DOL halts class-action rule enforcement. A component of BICE, this pause limits the scope by which investors can take collective legal action against firms that are not acting in a fiduciary manner.

“It seems like a clear intent to shift the enforcement mechanism away from class-action lawsuits toward state-law breach of contract claims,” Joshua Lichtenstein, an associate at the law firm Ropes & Gray, said. “The actionable claims could differ from state-to-state. That could mean some behavior is a breach of fiduciary duty to an IRA in one state but not in another.”

“We saw some significant drops in the IRA business in 2016. But this is the first time we’ve really seen the market share start to move,” Todd Giesing, the director of annuity research at the Limra Secure Retirement Institute, said. “This is likely a fiduciary impact,” he added. “The target with the fiduciary rule is on the IRA market.”

“Many advisors are looking to their home offices and other key sources for more support related to implementing the DOL Fiduciary Rule and to enhance their preparedness,” said Howard Schneider, president of Practical Perspectives and author of the report, in released comments. “While most advisors have some degree of preparedness for the fiduciary rule, fewer than one in two advisors feel well prepared. This suggests many advisors need additional help and support.”

In a letter to the DOL secretary, Senator Warren said delaying BICE “would endanger billions of dollars in Americans’ hard-earned retirement savings, and, if you enact the delay, it would ignore the preparation and positive outlook on the rule that many financial services and insurance companies have repeatedly expressed.”

Warren also referenced the statements of several CEOs, including UBS Group CEO and President Sergio Ermotti, who stated, “We implemented the first installation…and we think that actually is going to be positive overall in terms of the impact to the business divisions.”

So for now it appears everyone will learn a great deal more once the DOL’s comment period ends, but regardless of what exactly happens to the fiduciary rule on the whole or in part, Seismic will remain apprised of both the outcome and the ways firms can meet the demands of regulators and investors moving forward.


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