Drinker & Biddle's ERISA attorneys say the Department of Labor's January deadline to announce a new fiduciary standard regulation is "likely not to be met."
The White House's Office of Management and Budget must ultimately clear the new regulation, which the DOL has redubbed the "conflict of interest rule."
That process typically takes 90 days, and the DOL has yet to officially send the regulation to OMB for review, according to a client bulletin.
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"There is a small chance the rule is receiving special treatment," wrote the attorneys, and that it's possible the rule has been "pre-cleared" by the White House, which would reduce the requisite review time.
Regardless, a comment period will follow the rule's release. It's expected to draw a "robust response" from the Wall Street.
At least one lawmaker will be doing what he can to snuff the regulation.
Speaking at a recent event hosted by the Financial Services Roundtable, Sen. Orrin Hatch said, "we shouldn't have the DOL writing these sort of things" when asked about the proposal, according to reporting in ThinkAdvisor.
Hatch, who's expected to take over chairmanship of the Senate Finance Committee, said he'll reintroduce the SAFE Act, his own comprehensive retirement reform bill, early in the new Congressional session. He called the chances of its passage in 2015 "pretty good."
If passed, the law would put the kibosh on the DOL's intentions to expand the fiduciary standard.
While a January announcement might not come, Drinker & Biddle still expects the regulation to be released in the first part of next year, though the law firm is telling sponsor clients it won't be made effective until sometime in 2016.
For the majority of sponsors, the timing is irrelevant, write the attorneys, as the regulation will not require them to "adopt changes in how they manage their plans or investments."
Most RIAs also will be unaffected, as they already operate under fiduciary status.
Perhaps most consequential to RIAs and sponsors will be new rules affecting distributions, rollovers, and the advice given to IRA account holders.
While those new rules are expected, they remain unknown, but the attorneys are bracing clients for increased regulation.
Hatch's SAFE Act would prevent what he called "over-regulating IRA investment advice," and would give Treasury and the SEC jurisdiction over prohibited transactions.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
