Top of Mind


The Fiduciary Rule “Delay” That Wasn’t – Where Do We Go From Here?

If I had consulted with my Magic 8-ball last week, given the previous comments by newly appointed Secretary of Labor Alexander Acosta, it probably would have stated that “signs point to yes” with respect to a delay in the June 9th initial applicability date of the Fiduciary Rule. 

But, come to think of it, I never trusted that Magic 8-ball!  As reported in our recent Compliance Alert, Secretary Acosta decided not to delay the Rule, and it appears as though it will take effect at 11:59 pm (yes, the DOL’s FAQ is that specific - a great tidbit for playing Fiduciary Rule Trivial Pursuit). Theoretically, Congress could still step in and take action to delay the Rule's June 9th applicability date, but let’s say that the track record of Congress passing legislation within a two-week period has been, well, less than stellar.

So now that the Rule will take effect on June 9th, what happens next?  Key dates are as follows:

  • June 9th — Providers affected by the Fiduciary Rule panic! Okay, just kidding, but some key elements of the Rule do become applicable at 11:59 pm that day (again, love the timing). First, most advisers will become fiduciaries.  Secondly, advisers and financial institutions must give advice that is in the “best interest” of the retirement investor under standards of prudence and loyalty (see the DOL FAQ for details).  However, the DOL has emphasized that their approach to the June 9th implementation will be marked by an emphasis on compliance assistance (rather than citing violations and imposing penalties).
  • June 10 through December 31, 2017 (unless delayed) This time frame marks the transition period between the initial applicability date of the Rule and the date the Rule will become fully applicable. During the transition period, exemptions to the applicability of select provisions are modified, including the Best Interest Contracts (BIC) exemption and Principal Transactions exemption. If you are unfamiliar with these exemptions, they make it easier for advisers and financial institutions to comply with the Fiduciary Rule.
  • January 1, 2018 — The Fiduciary Rule becomes fully effective and the transition period ends. However, given the DOL’s public comments regarding this latter applicability date, a delay to a later date may be likely. But then again, many thought there would be a delay in the June 9th applicability date and that did not occur!

For more information on the Fiduciary Rule, check out my Top of Mind from February. And be sure to follow me on Twitter and subscribe to our free e-newsletter at the bottom of our homepage for the latest developments on the Fiduciary Rule.  

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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