The U.S. Department of Labor (DOL) announced that it will formally delay the implementation for certain aspects of the planned U.S. fiduciary rule for retirement advice, which were slated to take effect on April 10, by 60 days.
The move follows a memorandum from U.S. President Donald Trump directing the DOL to re-examine the rule to ensure that it does not restrict access to retirement information and financial advice.
Under the terms of the extension, which will be formally published later this week, the obligation for advisors to provide retirement advice that puts clients’ best interests first will now kick in on June 10.
“These fiduciary standards require advisors to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services and refrain from making misleading statements,” the DOL says.
In the meantime, the DOL is seeking comments on the issues the presidential memorandum has raised, particularly feedback that provides new data and analysis of the rule and its possible impact.
Although the U.S. Securities and Financial Markets Association (SIFMA) lauds the delay, the industry trade group also cites concerns with the scope of the planned review.
“We are concerned that the delay rule contains convoluted extraneous conditions that are not only based on imperfect data but contradicts the intent of the presidential memorandum,” says Kenneth Bentsen Jr., president and CEO of SIFMA, in a statement.
“The memorandum directs a review of the entire rule and its impact, not part,” he adds. “We trust the Department will undertake a sufficiently substantive review as requested by the president to ensure investors are not unduly harmed.”
Securities regulators in Canada are contemplating the possible introduction of a statutory best interest standard; and, in Ontario, an expert committee recently issued a report calling for a best interest standard for all forms of financial advice.
Read: Province in favour of Expert Committee’s proposed rules for advisors, financial planners
Read: No great opposition to proposed standard
Photo copyright: surangaw/123RF