Perhaps you heard last month that the U.S. Department of Labor unveiled its fiduciary rule for retirement accounts. Now that it’s done, we can move on to other things, right? Well, not so fast. As of press time, opponents of the measure were still parsing the 1,028-page rule before formulating a response and potential plan of action. Meanwhile, reaction to the rule ranged from huzzahs in some corners to uncertainty in others, along with the belief among some observers that the DOL caved in to financial services industry pressure and produced a watered down bill that could withstand court challenges. 

The controversy began in 2010 with the DOL’s original proposal to apply a fiduciary standard regarding advice for retirement plans under the Employee Retirement Income Security Act of 1974 (ERISA). It achieved a new level of intensity after the DOL issued a revamped proposal in April 2015. And now that D-Day has come and gone, it’s safe to say the issue will be with
us for the foreseeable future. 

Both Labor Department Secretary Thomas Perez and Sen. Elizabeth Warren (Massachusetts Democrat and founder of the Consumer Financial Protection Bureau) warn the rule will face blistering assaults in the courts and Congress by Wall Street firms and their representatives. It’s estimated the rule could cost Wall Street up to $17 billion a year, which Warren says is reason enough for financial firms to put up a fight and unleash their high-powered lobbyists and corporate litigators.

Meanwhile, in a joint press release, two Republican leaders said they would keep using the tools at their disposal to fight a fiduciary rule out of concern it would keep low- and moderate-income Americans from receiving financial advice and hamper the ability of small businesses to offer their workers retirement savings options.

The two Republican Congressmen—John Kline of Minnesota, who chairs the House Education and the Workforce Committee, and Phil Roe of Tennessee, chair of the Pensions Subcommittee—have held numerous hearings on the conflict of interest standard and introduced legislation to stop it. They have promised their attacks will continue. House Speaker Paul Ryan has their back on this issue. 

Still, if repeated attacks against Obamacare and the Dodd-Frank Act both in Congress and the courts are any measure, attempts to change the DOL rule might only weaken it and otherwise leave it more or less intact. 

One of the big complaints about the DOL fiduciary rule was that the anticipated compliance costs associated with implementing it would make it too costly for brokerage firms to service small retirement plans. But the final rule contained some surprises. For instance, it eliminated a proposed prohibited-product list for IRAs (including non-traded REITs and options), and it streamlined disclosure requirements and the best-interests contract that allows commissioned products in retirement accounts. The DOL also extended the implementation period for substantial changes from eight months to 12 months, and extended the full compliance requirement to January 1, 2018.

So not all B-Ds were negative about the final rule. “It does appear that all investments can be [used], as long as provisions of the [best-interest contract] are met, and it looks like they have made meaningful changes to fee and compensation disclosures,” said Doug Baxley, assistant vice president of compliance at Securities Service Network.

In a statement, LPL Financial said it was “pleased by what appears to be positive changes implemented in the rule,” noting the increased time for implementation, easier terms on using the contract with existing clients, and advisors’ freedom to recommend any product. Officials at both Cambridge Investment Research and Cetera Financial Group issued similar responses.