Phase two of the controversial Department of Labor fiduciary rule will almost certainly be delayed beyond Jan. 1, a panel convened by The American College agreed today.
However, panelists cautioned, that does not mean the fiduciary standard is going away. It does mean that smaller changes could yield big dividends for the industry. For example, the right for clients to class-action lawsuits could be removed.
Additional prohibited transaction exemptions are likely that better reflect the product development that has taken place, said Jamie Hopkins, director of retirement planning at The American College in Bryn Mawr, Pa.
Phase two rules deal mainly with the Best Interest Contract Exemption and Prohibited Transaction Exemption 84-24 -- both of which contain controversial mandates for the industry.
The DOL signaled it's intentions with a Request For Information published earlier this month in the Federal Register, panelists said. It introduced a pair of new comment periods designed to solicit information from the industry.
Many of the DOL queries focus on those exemptions and how they can be streamlined. Portions of the fiduciary rule went into effect June 9, requiring agents and advisors to act as fiduciaries, make no misleading statements, and accept only "reasonable" compensation.
New language to delay phase two of the rule could be sent to the Office of Management and Budget any day now, the panel said.
“It looks like the DOL will delay final enactment for awhile," said Steve Parrish, an adjunct professor at The American College. "There doesn’t seem to be a whole lot in there that says ‘Let’s get rid of the whole thing.’”
Meanwhile, Congressional opponents have not given up legislating away the fiduciary rule. A pair of bills are expected to be voted out of committees today to the full House.
The House Appropriations Committee will take up a DOL funding bill for fiscal 2018 that contains a rider that would prevent the agency from enforcing the fiduciary rule. In the House Education and the Workforce Committee, members are voting on legislation that would repeal the regulation and replace it with an advice standard based on disclosure.
The latter Affordable Retirement Advice for Savers Act was introduced by Rep. Phil Roe, R-Tenn., and co-sponsored by Reps. Peter Roskam, R-Ill., Tim Walberg, R-Mich., and Joe Wilson, R-S.C.
Supporters say it will overturn the fiduciary rule, protect access to high-quality, affordable retirement advice, require financial advisors to serve their client’s best interests, and enhance transparency and accountability through relevant disclosure requirements.
“At a time when Americans are increasingly more responsible for ensuring financial security during their retirements, preserving access to affordable advice is critical," said Cathy Weatherford, president and CEO of the Insured Retirement Institute.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].