Industry stakeholders would be wise to temper hopes that introduced legislation to delay implementation of the Labor Department’s fiduciary rule will be addressed quickly, according to one veteran industry advocate.
The Protecting American Families’ Retirement Advice Act, introduced by Rep. Joseph Wilson, R-SC, last week, would move the implementation date for the rule to two years after passage of the bill. The first implementation date is scheduled for April 10.
“To get this bill through quickly would be a real challenge,” said Diane Boyle, senior vice president of government relations for National Association for Insurance and Financial Advisors. NAIFA, whose core membership sells life insurance along side investment products, is opposed to the rule.
For all the investment and debate over the rule among stakeholders and consumer advocacy groups, its necessity, or opposition to it, never emerged as a household issue, notes Doyle.
The incoming Trump administration has done little to lift the issue from its relative obscurity among the electorate. And while Congressional Republicans have been steadfastly against it throughout the six-year rulemaking process, they are currently embroiled in how to make good on Mr. Trump’s campaign pledge to repeal the Affordable Care Act, making immediate attention to Wilson’s bill unlikely.
“The legislative process isn’t exactly speedy, and Congress is working on such big issues,” said Boyle.
In its current form, Wilson’s three-paragraph piece of legislation does not have any funding provisions. That means it cannot be attached as a rider to the budget resolution.
Predicting a potential timeline for the bill’s consideration will be best left for after the inauguration, said Boyle. Ultimately, any legislative effort to address the rule will be influenced by the Trump administration.
“They may want to do something other than simply delaying implementation of the rule as is,” said Boyle. “The hope is that the administration will want to work with Congress to examine the rule to determine what needs to be done and the best course of action.”
The Senate too will also have its hands full managing the ACA’s priority and passing a budget to fund the government for the rest of the year by the end of April.
In order for it to pass, a bill to delay the rule will need 60 votes in the Senate to survive a filibuster.
Last May, a resolution to kill the fiduciary rule passed the Senate by a 56 to 41 vote. President Obama ultimately vetoed it.
Three Democrats in the Senate voted for that bill—Sen. Joe Donnelly, R-IN, Sen. Heidi Heitkamp, D-ND, and Sen. Jon Tester, D-MT. All three are up for re-election in 2018 in states that broke heavily for Trump in the Presidential election.
Presuming those Senators would maintain their opposition to the rule, that would bring 55 votes for a bill to delay the rule’s implementation date if support were uniform among Republicans.
Legislation that would delay the rule under the pretense of making Labor’s fiduciary standard more workable could provide cover for other Democrats to vote with Republicans.
But if such a bill is not addressed before the current April 10th implementation date, which is just 80 days after the inauguration, industry will of course still be required to comply with the new standard for advising on IRAs and 401(k) plans.
“It’s positive that legislation was introduced early,” says Boyle. “We wanted to see something done to recognize the negative direction we think this rule is taking industry.”