Washington, D.C. - November 28, 2017 (The Ponder News) -- Department of Labor (DOL) issued a final rule extending the applicability of the full protections of the conflict of interest (fiduciary) rule by a full year and a half, from January 1, 2018 to July 1, 2019. The fiduciary rule was initially set to take effect in April 2017, but was delayed following a directive by President Trump early in the year. After examining the rule, Labor Secretary Alexander Acosta announced in May that the rule would not be delayed further and would take effect in January 2018. This announcement means the rule – which was originally announced in 2015 – will not be implemented until July 2019.
The Save Our Retirement (SOR) coalition issued the following statement in response:
“This action is effectively a repeal of the fiduciary rule’s most critical provisions – the provisions that ensure the rule is effective and enforceable and that financial advisers and their firms are accountable for providing the best interest advice retirement savers both want and need. DOL claims it is simply delaying the full implementation and enforcement of the fiduciary rule by 18 months, but delay implies these provisions will become applicable in the near future. However, the Trump Administration has made clear its goal is that these most critical provisions never become applicable. Instead, the Administration’s intent is to use this time to permanently dismantle key elements of the rule.
“The Trump Administration’s actions prove that it is far less interested in protecting investors from the harmful effects of conflicts of interest than it is in catering to Wall Street interests. This rule is only as strong as its ability to be enforced. By stripping out the rule’s private enforcement mechanism, and by stating that the Department won’t enforce the rule, the DOL has rendered the rule toothless. This is exactly what the industry rule opponents wanted – a best interest in name only standard that leaves the broker-dealer, insurance, and mutual fund industry free to continue draining retirement savers’ hard-earned money with impunity. This outcome is especially troubling, since many firms in the adviser industry have embraced the rule and were fully prepared to comply by January 1st.”
U.S. Senator Cory Booker (D-NJ) also commented, “Today’s decision means that those financial advisors more concerned with their bottom line than with helping customers will now have 18 more months to ignore new consumer-friendly rules that protect Americans’ retirement savings from bad investment advice and hidden fees. This new delay is on top of a six-month delay in enforcement of the conflict of interest rule announced earlier this year.
“Enough is enough. It’s time to finally enforce these rules and ensure that every financial advisor prioritizes their clients' interests over their own.”
Senator Booker has been a leading voice in the effort to implement the consumer safeguard. In February 2015, he joined President Obama and Senator Elizabeth Warren at AARP’s headquarters to announce the new rule and the enormous impact it would have on families saving for retirement. When it was signaled earlier this year that the rule might be scrapped, Booker publicly pressured the Labor Department for months, sending several letters to the Labor Secretary and penning an op-ed with Senator Warren explaining why the rule was so important to Americans saving for retirement.
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