The executive order President Trump has been expected to sign directs the Labor Department to delay the fiduciary rule to give the financial industry another six months to comply with the regulation, according to a draft of the order obtained by BenefitsPro.
According to the draft of the order, the Labor Department will review the rule to determine “whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”
The order also instructs the Labor Department to execute a new economic impact analysis of the rule.
Specifically, that new analysis will examine whether the April 10 implementation date of the rule “has harmed or is likely to harm investors” by reducing access to some retirement investment products.
Labor is also instructed to determine if the rule has disrupted the retirement services industry in a way that will adversely impact investors, and whether or not the rule is likely to create an increase in litigation and if it will raise the cost investors pay for retirement advice and investments.
The draft of the executive order specifically takes aim at the rule’s Best Interest Contract Exemption, the rule’s main enforcement mechanism, and instructs the Labor Department to determine whether it “undermines the rule’s effectiveness at achieving its intended goals.”
Upon completion of the new analysis, the order instructs the Labor Department to publish a new rule “rescinding or revising” the BIC Exemption and other prohibited transaction exemptions in the regulation.
“The Department shall further consider whether an additional postponement of the Fiduciary Duty Rule’s applicability date should be instituted to ensure that affected entities have a reasonable period of time to come into compliance, taking into account the long lead times necessary for regulated entities to alter affected existing contracts, issue new contracts, and provide clear and accurate information and disclosures to plan sponsors, investors, and retirees,” according to language in a draft of the order.
The order also instructs the Labor Department to consult with the Department of Justice to potentially drop its defense of pending litigation against the rule.
The draft of the order obtained by BenefitsPro could be subject to change.
Sean Spicer, the White House Press Secretary, called the rule a “solution in search of a problem” during a press conference, and said President Trump is issuing the order because the “DOL exceeded its authority with this rule.”
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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.
