US Labor Secretary: Fiduciary rule to take effect June 9

Francis Osborne
May 24, 2017

Starting next month, retirement savers throughout the USA who work with brokers will face new rules governing how they pay for investment advice.

Heavily criticized by Wall Street and Republicans for potentially raising the cost of investment advice, the rule has faced a rocky time becoming effective, with Trump last month delaying its enactment date, originally April 10, for 60 days. Given the new president's and the GOP's rhetorical stance towards government regulation of financial markets, it was naturally assumed that the fiduciary rule would be, by one mechanism or another, prevented from taking effect.

They say the rule raises the costs of financial advisory services with burdensome compliance requirements.

Opponents of the rule have said that it could reduce investors' choices and would benefit trial lawyers at investors' expense, he writes, adding that Trump's administration "presumes that Americans can be trusted to decide for themselves what is best for them" - a view that puts in question the need for the rule. Such review will continue until the January 1, 2018 final implementation date.

While ADISA is disappointed with the Department's conclusion that it lacks an adequate basis at this time to delay the rule's implementation date beyond June 9, we are committed to continuing involvement in all aspects of current legal and regulatory efforts to address the ability of retirement savers to access quality and affordable investment advice.

"The fiduciary rule presents real harm to Main Street investors and retirement savers, and a delay would have provided a helpful period of relief for those already feeling the weight of its implementation", Bradley said.

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Observers also expect R6 funds to swell in popularity among retirement plan advisers due to the fiduciary rule. The initial phase of the rule's implementation will begin June 9.

"When consumers are not fully informed about the potentials for conflict of interest or hidden fees, the amount they pay for retirement investment goes way up", argues Scott Puritz, an investment adviser at the firm Rebalance IRA who has testified in favor of the Obama approach.

Many Trump supporters and financial advisers were sure to be frustrated as news of the administration's decision spread Tuesday morning.

Earlier this year, the Department issued a field assistance bulletin that described the Department's temporary enforcement policy related to the fiduciary rule, whereby the Department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.

He also said the department was seeking "public comment" on how to revise the rule, leaving open a possibility of repealing the rule in future.

Business groups and financial firms detest the rule and challenged it in court soon after it was promulgated. The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.

Other reports by TheDailyFarc

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