"With the demise of the DOL rule, we stress that one of the highest investor protection priorities for the new administration must be establishing a Uniform Fiduciary Duty for personal investment advice,” Schacht said in a statement. “It’s an opportunity for the incoming SEC leadership to address this once and for all in a much more comprehensive way.”
Cathy Weatherford, CEO of the Insured Retirement Institute, a consumer coalition representing insurers, asset managers, broker-dealers and other financial professionals, cheered what she anticipated would be the rule’s delay.
“We applaud the president’s leadership in calling for the DOL to put the rule on hold to give policymakers time to reevaluate the rule in order to protect consumers from these negative consequences,” Weatherford wrote in a statement.
Because its scope is limited to retirement accounts, the DOL is unable to create a rule applicable to all investment accounts —such authority is limited to the SEC.
Members of the financial industry who have lobbied in support of and in opposition to the DOL’s rulemaking were also caught up in Friday’s confusion. Kevin Norris, president of Souderton, Pa.-based Univest’s wealth management division, applauded the rule’s potential delay.
“Today’s decision by the Trump Administration to halt the order to implement the fiduciary rule is a win for both small investors and providers of investment advice to those investors,” wrote Norris. “The delay will benefit small investors as they will continue to be able to receive services from providers, which may not be available to them had the rule gone into effect. Many firms were considering account minimums to meet the requirements of the rule. It will also benefit providers as the delay will allow them more time to adequately prepare to meet the requirements of the rule.”
At the same time, Julian Rubenstein, CEO and president of Boca Raton, Fla.-based American Asset Management, lamented what he believed to be a “disastrous step in protecting investors’ interests” in comments released on Friday.
“The American investor needs protection from financial advisors who may not have their best interests at heart,” said Rubenstein. “This is like telling medical doctors not to practice the best medicine that they can.”
In the draft of the rule released by the DOL last year and still applicable as of April 10 of this year, financial advisors would be held to a stringent best-interest standard of advice for any recommendations given within retirement accounts, expanding rules which limit third-party commissions and require higher levels of conflict-of-interest disclosure from 401(k) plans to individual retirement accounts for the first time.
Though Trump’s executive order did not, as many anticipated, delay or overturn the rule, it does signal the administration’s desire to roll back financial regulations in a more meaningful way, said Jamie Hopkins, co-director of the Retirement Income Program at the American College of Financial Services.