Obama-era rule on financial advisers to go forward, for now

24 May, 2017, 09:38 | Author: Joy Garcia
  • 401k fiduciary retirement department of labor

The rule has faced a rocky time becoming effective, with President Trump last month delaying its enactment date, originally April 10, for 60 days.

Despite efforts to delay it further, the so-called fiduciary rule will get put in place June 9, Acosta wrote in an op-ed for the Wall Street Journal.

Acosta said there's "no principled legal basis to change the June 9 date while we seek public input".

"Trust in Americans' ability to decide what is best for them and their families lead us to the conclusion that we should seek public comment on how to revise this rule". It also changes the definition of who is a fiduciary when it comes to advising employers on their 401 (k) s, pensions and other retirement plans.

The DOL delayed portions of the Obama administration's regulatory package that aimed to reduce the allegedly conflicted investment advice given to retirement savers until June 9.

"Assuming the compensation is reasonable, such an approach is a potentially powerful means of reducing conflicts of interest with respect to mutual fund recommendations and correspondingly reducing the need for heightened surveillance around adviser conflicts of interest", the DOL said of clean shares.

The announcement dashes the hopes of many in the financial services industry who wanted a more substantial delay.

Pamela Banks, senior policy counsel for our colleagues at Consumers Union, said in a statement that the "common-sense changes are long overdue", but remained cautious about the rule's future. The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.

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Under the fiduciary rule, an advisor would be required to determine what would best suit a given customer's needs, even if they don't offer that product or service.

Variable annuities can provide higher returns from the stocks or bonds they are tied to, but they are riskier than fixed annuities, which pay a set income to an investor for life.

"This decision will make it harder for many Americans to save for a dignified retirement".

Business groups and financial firms detest the rule and challenged it in court soon after it was promulgated. "Now that the fiduciary rule is cast in stone, common rollover practices violate regulations".

This means all fees and commissions must be clearly communicated, and advisors can not hide any conflicts of interest with regard to selling certain products or services. The fiduciary rule is a highly contested piece of legislation produced during President Obama's time in office.

Opponents also say the Labor Department overstepped its legal authority and overruled a peer agency.

Major Republican legislation to unwind the Dodd-Frank law, now pointed toward a vote by the U.S. House, would repeal the Labor Department rule.

"Under the Obama administration, the Securities and Exchange Commission declined to move forward in rule-making". The short answer provided by the Labor Department is, "it's possible", certainly following the results of the analysis directed by President Trump. "We will do so while respecting the principles and institutions that make America strong".

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