The Labor Department’s decision to delay the fiduciary rule’s original April 10 implementation date by 60 days gives the financial services industry considerable short-term relief, according to industry insiders.
Beginning June 9, 2017, industry will have to comply with the rule’s impartial conduct standards, which requires that advice must be in retirement investors’ best interest, compensation must be reasonable, and prohibits institutions and advisors from giving misleading statements to investors.
That much was required under the rule’s original April 10 implementation date.
But beyond delaying the impartial conduct standards by 60 days, Labor’s rule also delays the requirement that financial institutions and advisors provide written acknowledgment of their fiduciary status. That requirement was also scheduled for April 10 implementation, but is now pushed off until January 1, 2018.
Under the original implementation date, firms that opted to sell investments under the fiduciary rule’s Best Interest Contract Exemption -- or any of the other prohibited contract exemptions the rule created or amended -- would have had to acknowledge their fiduciary status in writing, along with a written description of material conflicts of interest.
The decision to delay the requirement for those two written acknowledgments until 2018 are the biggest surprises in the Labor’s delay, and “substantially alter the rule.”
Delaying the requirement to acknowledge fiduciary status in writing, the Labor Department has ameliorated industry’s potential liability, at least until the beginning of next year.
The fiduciary rule’s original implementation schedule gave broad relief for complying with the rule’s BIC Exemption until the beginning of 2018.
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