Opponents of the Department of Labor’s fiduciary rule may be surprised to find the final version far less objectionable than they thought, according to a former DOL acting secretary.
“The most important thing DOL will do to help the industry with implementation is to scale back the rule,” said former DOL Deputy Secretary Seth D. Harris. “DOL has been listening to the concerns from Congress and the industry about the administrative burden.”
Harris was the deputy secretary when the department initially proposed a rule in 2011 and was acting secretary in 2013 as the current rule was developed. He is now counsel with the public policy and regulation practice at Dentons, a global law firm.
The proposed version of the rule, released in April 2015, is aimed at agents and advisors who recommend investments in ERISA-covered accounts. The rule requires advisors who work with individual investors to comply with a fiduciary standard.
Harris said recently that DOL acknowledges the final fiduciary regulation would warrant a significant transformation of a long-standing business model in the insurance industry. The department’s senior leaders also recognize the industry would need to put into place new systems and procedures to comply with the rule, which will take time.
Once DOL publishes the final regulation in the Federal Register, the rule-making process transitions to a phase of interpretation, guidance and compliance. The Department will publish at least two accompanying pieces with the rule: a preamble and compliance instructions.
The preamble will likely address the main points gleaned from the public comments submitted to the agency, including objections to the regulation. The compliance instruction is only the first type of document DOL will issue to assist the industry. Then, the real work of implementation begins.
Julie M. Anderson served as an executive in the Obama Administration and at IBM. She now runs her own firm, AG Strategy Group, which provides strategy consulting and management training services to government agencies and federal contractors. Julie may be contacted at [email protected]
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