Citing rule of law under the Administrative Procedures Act, newly minted DOL Secretary Alexander Acosta announced in a WSJ Op-Ed piece that there will be further delay to the DOL conflict of interest rule currently scheduled to go into effect June 9th. The date for full implementation will remain 1/1/18.
At the same time, a DOL Field Bulletin announced that during the phased implementation period, the DOL will not actively pursue claims against fiduciaries making a good faith effort to comply.
The Trump administration is on the warpath to limit regulations that it claims is hurting business with word that for every new regulation promulgated, two others will have to be repealed. The President had called for an economic analysis of the rule which the DOL is likely to pursue during the implementation period. Acosta left the door open for partnership with the SEC.
So far courts have upheld the DOL fiduciary rule which may have persuaded Acosta not to issue further delays.
Though the fiduciary and impartial conduct standards will go into effect June 9th, enforcement action by the DOL and litigation under private right of actions will not, leaving the rule a standard in name only.
Though the brokerage, advisory and money management industries scramble to determine how to react in what is a moving target, 401k plan sponsors still have the luxury to sit back and wait to see how their partners, especially advisors and record keepers, change the terms of their relationships.
At stake for plan sponsors and participants is whether the DOL rule devolves into a mere disclosure of conflicts rather than elimination of them or, perhaps worse, a suitability standard that now applies to brokers earning commissions. Most experienced advisors are acting as fiduciaries and these advisors and many broker dealers are already eliminating conflicts of interest in anticipation of the DOL rule.
