The delay of the fiduciary rule has been panned by the rule’s supporters and lauded by its opponents—but both sides might change their minds about the DOL's decision after a closer reading.
What may give both proponents and critics reason to pause is, that in delaying the rule on Tuesday, the U.S. Department of Labor appeared to solidify its commitment to two key portions of the rule establishing stricter standards for advice within retirement accounts, while reiterating that it intends to make the rule applicable this year.
Some opponents of the rule argue that the 60-day delay announced by the DOL won’t go far enough, as the agency reiterated that elements of the rule expanding the definition of “fiduciary” and establishing standards for impartial conduct will go into effect on the rule’s new applicability date, June 9.
"We are concerned that the delay rule contains convoluted extraneous conditions that are not only based on imperfect data but [which] contradicts the intent of the presidential memorandum," said Kenneth Bentsen Jr., president and CEO of SIFMA, in a statement released Wednesday. "The memorandum directs a review of the entire rule and its impact, not part.”
The DOL argued that advisors have had almost an entire year since the fiduciary rule was finalized, thus there is “little basis” for arguments that the industry needs additional time to prepare for the rule’s applicability.
Blaine Aikin, chairman of the CFP Board and executive chair of fi360, a support firm for financial advisors, notes that the DOL gave supporters of the rule reasons for optimism, even as it pushed applicability back another 60 days.
“The delay definitely does not deal a mortal blow to the rule,” says Aikin. “The delay makes it more likely that we will see major parts of it put into effect as the law of the land.
We expected a 60-day delay, but they did not go longer than that. They pushed out some of the more onerous parts of the rule, the exemptions, to better see what the impacts will be, but the requirement that those who provide advice will be fiduciaries and adhere to impartial conduct standards remains. … What they have done is make it more likely that that part of the rule, which is a very important part, will remain.”
The DOL was acting in response to a Feb. 3 memorandum from President Donald Trump requesting an investigation into the rule’s potential impacts. At the time, the president instructed the DOL to take any measures necessary to delay the rule to allow for sufficient time for an economic study.
In a released statement, Cathy Weatherford, CEO of the Insured Retirement Institute, a critic of the rule, says that the DOL is failing to abide by the president’s request by only issuing a partial delay of the rule.