What’s in Store for the DOL Fiduciary Rule?

Commentary

This past weekend was a flurry of excitement, and that was before the Super Bowl even started!

As you undoubtedly know, on Friday it was widely reported from a circulated draft of a memorandum the White House intended to submit to the Secretary of Labor pushing back the April 10 implementation deadline by 180 days. We cautioned it was a “draft and could change” which was prescient because IT DID!

No sooner had reporters’ fingers finally stopped typing with dozens of articles posted announcing the delay, did we receive word from our inside sources that the final memorandum DID NOT include the delay language.

It seems that the draft relied on a law that allows delays of effective dates. The DOL rule, however, is already effective (officially published in the Federal Register last June). Even though the “applicability date” isn’t until April 10, 2017, it doesn’t alter the fact that the rule IS effective and the administration cannot legally postpone an effective rule.

The DOL posted a statement on its website that it will now consider its legal options to delay the applicability date as it complies with the president's memo.
Americans for Annuity Protection believes this is still good news.

We support the administration’s awareness of the DOL’s failure to thoroughly and convincingly demonstrate that the annuity marketplace, particularly the fixed annuity marketplace, is haunted by high fees and conflicted advice. And so, we welcome the administration’s directive to a “do over.”

However, we also maintain that it is unlikely the best interest standard is going to go away. The key offices we talked to on Friday repeated that there is little chance for more than a “delay and some fixes.”

And, we now know from Acting U.S. Secretary of Labor Ed Hugler’s statement issued on Friday that: “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”

President Trump’s memo ordered the Secretary of Labor to examine the DOL's fiduciary duty rule and, if appropriate, to propose a rescission or revision of the rule. He also ordered the Secretary of the Treasury to conduct a general review of financial regulation.

The memo also directs the Secretary of Labor to examine the fiduciary rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice. As part of this examination, the secretary is to prepare an updated economic and legal analysis concerning the likely impact of the rule, including whether it is likely to harm consumers because it:

1. Reduces access to retirement savings options or advice;

2. Results in industry dislocations or disruptions that may adversely affect consumers; or,

3. Causes an increase in litigation and an increase in the prices that consumers must pay to gain access to retirement services.

If the secretary determines that any of these considerations are true, OR if he concludes for any other reason that the rule is inconsistent with Principle (a) of the President’s Core Principles for Regulating the United States Financial System which is to: (a) empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;

The memo states that the DOL is instructed to rescind or revise the rule and publish for comment any determination.

The memo also states that it does not give DOL or its secretary any additional authority and shall be implemented consistent with applicable law. Any changes to the fiduciary rule and any delay of its applicability date must be consistent with existing authority and procedures under the Employee Retirement Income Security Act and the Administrative Procedures Act.

It is unclear to what extent changes in the rule will be affected by the delayed confirmation of Trump's nominee for Secretary of Labor, Andrew Puzder.

Puzder's confirmation hearing has been delayed four times and now reportedly will not be rescheduled until his paperwork is received from the Office of Government Ethics.

Americans for Annuity Protection urges you to continue to engage and stay active. We must continue to bolster our commitment to making sure consumers retain access to expert insurance advice at a cost that is affordable and within their means.

Please TAKE ACTION and ask your representatives to encourage the DOL to delay the applicability date of this Rule and find a better path for consumers.

Kim O’Brien is a 35-year veteran of the insurance industry specializing in guaranteed annuities and life insurance.  She is the current CEO of Americans for Annuity Protection and Founder of AssessBEST, Inc., a sales and compliance software system.  Visit www.AAPnow.com or www.AssessBEST.com for more information.

Contact Kim at [email protected].

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