‘Fiduciary rule’ to take effect June 9, but changes likely ahead

May 23, 2017 -- A rule holding financial advisers to a “fiduciary standard” affecting how they may advise clients on retirement savings will take effect on June 9, without further delay, the Secretary of Labor said Monday.

Writing in the Wall Street Journal, Labor Secretary Alexander Acosta said that his department has “found no principled legal basis to change the June 9 date” of the so-called “Fiduciary Rule.” Full implementation of the rule is not until Jan. 1, 2018 – but the rule officially takes effect in two weeks.

However, in his Journal column, Acosta noted that the rule “may not align with President Trump’s deregulatory goals.” As such, some expect that between June 9 and the beginning of next year, the DOL will proceed with new rulemaking to either modify or overturn the rule taking effect June 9 (with a full implementation date perhaps postponed beyond Jan. 1).

Additionally, DOL Monday evening night released guidance noting that between June 9 and Jan. 1 (the so-called “phased implementation” period), the agency will not enforce claims against fiduciaries “working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.“

The agency also noted that to the extent circumstances surrounding the applicability date of the rule and exemptions give rise to the need for other temporary relief, the department’s Employee Benefits Security Administration (EBSA) “will consider taking such additional steps as necessary.”

The guidance also notes that the DOL has “repeatedly said” its general approach to implementation will be through emphasis on assisting plans, plan fiduciaries, financial institutions, and “others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions” rather than citing violations and imposing penalties.

“Consistent with that approach, the Department has determined that temporary enforcement relief is appropriate and in the interest of plans, plan fiduciaries, plan participants and beneficiaries, IRAs, and IRA owners,” the guidance states.

DOL guidance on fiduciary rule: Field Assistance Bulletin No. 2017-02