US Labor Secretary says fiduciary rule to take effect on June 9

US Labor Secretary says fiduciary rule to take effect on June 9

New DOL head Acosta, who had not previously spoken publicly about the rule, announced yesterday that there would be no more delays of the fiduciary rule before the June 9th applicability date.

As reported, the rule was due to take effect on 9 April, but was delayed in March, a month after the still-new-to-office USA president, Donald Trump, called on the Department of Labor to study the rule, to assess whether its implementation would limit investors' access to investment products or advice, cause disruptions in the industry, and/or increase litigation against companies providing such advice and products.

But in his Wall Street Journal opinion piece, Acosta also writes it's necessary to get more public input on the rule, which he calls a "controversial regulation" - and that the DOL still plans to follow through on president Donald Trump's directive to review it.

"We...have found no principled legal basis to change the June 9 date while we seek public input", he wrote.

There's also the seller's exception, which states that sales recommendations made by a broker to a retirement plan with at least $50 million in assets will not be considered investment advice and thus subject to the fiduciary rule as long as it is clear from the beginning of the transaction that the person selling the investments does not consider themselves to be a giver of impartial investment advice.

Although the Labor Department could still make revisions to regulation after completing its review, fiduciary supporters welcomed the news.

"We are confident that any data-driven, robust analysis that fairly considers the facts will prove again that Americans saving for retirement deserve to have their best interests put above their financial advisers' economic interests", adds Dennis Kelleher, president of advocacy group Better Markets.

"The rollover decision at retirement may be the most important one many investors ever make and it is often irreversible".

In addition, Secretary of Labor Alexander Acosta spelled out the DOL's plan and his thinking in a Wall Street Journal op-ed article. However, he said the department will still work to comply with the president's request and continue to seek public input about the rule and its potential impact on retirement savers until January 1.

"In anticipation of the rule taking effect, SIFMA's members have been working for the past eighteen months to develop the systems and processes to ensure compliance". While most of these companies lobbied against the rule initially, they've become more ambivalent about it now that they've done most of the hard work required to comply with it. The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.

Trump ordered a review of the rule on February 3, with White House Press Secretary Sean Spicer calling it "regulatory overreach" by the Labor Department.

"Under the Obama administration, the Securities and Exchange Commission declined to move forward in rule-making".

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