Agents, financial advisors and other representatives of the financial services industry have until 11:59 p.m. Friday to comment on delaying implementation of provisions of the Department of Labor’s fiduciary rule.
Friday marks the end of a two-week period for the DOL’s request for information to delay the second phase of the rule’s implementation.
Phase two of the rule deals mainly with the Best Interest Contract Exemption and Prohibited Transaction Exemption 84-24.
The exemptions establish procedures to allow financial advisors to continue collecting commission income selling advice and products into retirement accounts.
Likelihood of Delay High
There is a high likelihood that the second phase of the rule will be delayed, some experts believe.
One scenario has the DOL delaying the effective date of phase two by one year and then giving advisors a year after that to comply. That route would push the deadline back by as much as two years.
“I think that is a reasonable time to gather the data and do the review work that the president has ordered,” said Bradford P. Campbell, an attorney at Drinker Biddle & Reath and former head of the Employee Benefits Security Administration which drafted the fiduciary rule, during a webcast on Thursday.
President Donald Trump in February ordered the DOL to review the fiduciary rule to determine whether it would make it harder for investors to gain access to retirement advice.
“It looks like the DOL will delay final enactment for a while,” said Steve Parrish, an adjunct professor at The American College during an separate panel discussion Wednesday.
The fiduciary rule’s initial provisions, which went into effect June 9, require agents and advisors to act as fiduciaries, make no misleading statements and accept only “reasonable” compensation.
Exemptions Comment Period Still Open
A separate comment period to respond to a DOL query for information on exemptions to be included under the fiduciary rule remains open until 11:59 p.m. Aug. 7.
Regulators have indicated an interest in gathering information about possibly adding new exemptions or amending existing exemptions to make it easier for financial services companies and distributors selling into retirement accounts.
Recent advances and innovations in the industry are helping to create more compliance mechanisms, possibly opening new exemptions pathways, according to DOL regulators.
Fee-based annuities, many of which have been released in the past 12 months, tamp down on conflicts of interest that crop up with commission-based products, to take one example.
Other innovations include new mutual fund share classes, new advisory reporting and data analytics programs.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]