In Wake Of Court Ruling, DOL Will Cease Enforcing Fiduciary Rule, Source Says

In the meantime, several states have enacted their own fiduciary regulations, with other proposals making their way through legislatures, and professional organizations within the financial industry have weighed tightening their own standards. Simultaneously, the SEC is at work drafting a fiduciary rule of its own.

Many advisors fear that the SEC’s fiduciary regulation would water down the work of the DOL, yet many are optimistic that federal policy makers continue to consider best-interest regulations.

At TD Ameritrade, a spokesperson said that the company hopes the SEC can come forward with a universal fiduciary rule in the wake of the decision.

“We’ve long said we support a fiduciary standard when providing personalized investment advice to retail investors, and this ruling may provide the SEC with an opportunity to establish one that applies to all accounts, not just retirement accounts,” said Joseph A. Giannone, TD Ameritrade Institutional spokesperson.

While the SEC is expected to come forward with its own fiduciary regulation within the next few months, the DOL has continued to review its own regulations.

While the court decision prevents the DOL from enforcing its rule, the review process is expected to continue or accelerate, according to the Wagner Law Group.

“We do think that the Fifth Circuit's decision will encourage [Labor] Secretary [Alexander] Acosta and others in the Trump administration to speed up the DOL's review of the fiduciary rule,” wrote Wagner. 

Tony Stich, chief operations officer at Advicent, believes that the financial industry has moved too far in the direction of fiduciary advice to turn back the clock.

“Significant investments from broker-dealers and larger institutions to meet the DOL expectations have largely been put in place,” said Stich. “We don’t’ envision a great deal of rollback considering the restructuring and investment.”

Stich also believes that, while the Trump administration may have opposed to the DOL’s rule making, they would be less hostile to a regulation written by the SEC.