Archive for December, 2017

DOL Adopts 18 Month Delay to Fiduciary Rule

Friday, December 1st, 2017

The US Department of Labor (the “DOL”) formally expended the remaining implementation of the Fiduciary Rule that was scheduled to go into effect January 1, 2018 (“Phase 2”) by 18 months.  The new effective date of Phase 2 is July 1, 2019.

Phase 2 would include full implementation of the Best Interest Contract Exemption (the “BIC” Exemption).  In addition, certain fiduciaries could avoid the full BIC requirements if they only charge a “level fee.”  Many investment advisers could avail themselves of the level fee exemption, but others would find the requirements challenging (such as those advisers that charge different fees for managing different asset classes).  Phase 1 of the DOL Rule, which required fiduciaries (including broker-dealers) to comply with Impartial Conduct Standards, continues to be in effect.

The DOL has said that the delay is meant to allow additional time to consider changes to the rule.  The SEC has also made recent statements regarding the Commission’s plans to consider a fiduciary rule for broker-dealers.  Many people have said that the DOL and SEC should work together on a fiduciary rule.  The federal agencies would also have to work with state insurance regulators to come up with similar insurance rules.  That would be a difficult task.  MarketCounsel believes that the 18-month delay places Phase 2 in jeopardy.

As always, members of MarketCounsel’s compliance management programs can find more information on the DOL Rule and its implementation on RIAglass by searching for other articles on the topic.