As ordered by President Trump in last month’s presidential memorandum (the “Memorandum”), the U.S. Department of Labor (DOL) proposed a 60-day delay to its conflict of interest rule (commonly referred to as the “fiduciary rule”). The effective date of the fiduciary rule, which revised the definition of a “fiduciary” for retirement investment advice purposes, is currently April 10, 2017. In addition to a general 15-day comment period, the DOL is also accepting comments until April 16, 2017 on the Memorandum itself and on issues applicable to whether or not the fiduciary rule should be revised, revoked, or further delayed.
While the delay may result in additional confusion among the financial services industry, the DOL believes that it is the only way to avoid unnecessary disruption in the marketplace should the fiduciary rule be rescinded or significantly revised after its effective date. Already, many financial institutions and advisors have invested considerable time and effort in revising their practices and policies to comply with the fiduciary rule. Moreover, retirement plan participants and individual retirement account (IRA) holders are now arguably better educated on the current standards applicable to industry professionals and the perceived deficiencies under the Employee Retirement Income Security Act of 1974 (ERISA). Regardless, the fiduciary rule already has significantly affected the retirement services market, and may serve to further incentivize fiduciary litigation in the ERISA arena.