As industry awaits what insiders say is an imminent delay of the Labor Department’s fiduciary rule,one consultant says many financial institutions are planning tokeep compliance protections in place even if the rule is ultimatelydismantled.

“A number of our clients are saying they don’t intend to turnback,” said Jason Roberts, CEO of the Pension Resource Instituteand a founder of the Retirement Law Group, which represent upwardsof 90 financial institutions, accounting for 100,000 investmentprofessionals.

Related: What is fiduciary investment advice underthe DOL fiduciary rule?

He and other consultants have received credible information thatthe Trump administration will release several directives that woulddelay the rule’s implementation date anywhere from 60 days to ayear.

One alleged directive will instruct the new leadership at Laborto delay the rule until private litigation has run its course inthree federal courts.

Another will instruct Labor to propose a one-year delay, whichwould be subject to a notice and 14-day comment period.

Yet another directive reportedly instructs Labor to withdraw therule and rewrite it in consideration of another comment period.

If a delay does come, service providers, brokers, and insuranceagents will be able to continue to operate as they have, sellingcommission-based investments without having to use the rule’sBest Interest Contract Exemption.

They will also be able to advise retirement savers on rolloversfrom 401(k) plans without being contractually obligated to giveadvice in the best interest of savers.

But Roberts does not expect a wholesale return to the status quoif the rule is delayed and ultimately rewritten.

“Many are saying they will continue to train and superviseadvisors to the higher standard of care the rule creates, leavingsafeguards in place to comply,” said Roberts.

In doing so, institutions can assure they are going above andbeyond what the Securities and Exchange Commission and FINRArequire to manage conflicts of interest, he said.

Related: Coalition urges Trump not to dumpfiduciary rule

While some portion of the industry appears ready to embrace ahigher standard in the event of a delay, most are not willing to doso under contract, according to Roberts.

Most institutions plan to work under the five-part fiduciarytest that existed prior to Labor’s rule, which did not considerone-time advice on IRA rollovers and a one-time recommendation of athird-party manager to be fiduciary acts.

A few of the firms Roberts consults with will adopt the rule’smore stringent standards on rollover, distribution and third-partyrecommendation advice in spite of a delay. Firms willing to fullyimplement the rule are hoping to leverage marketing and recruitingopportunities.

“It will be interesting to see how many other firms are takingthis approach,” said Roberts. “If the majority of the industry goesthis direction, then those who don’t might not only be subject tocompetitive pressures--both with respect to clients and advisorrecruitment--but also may begin to be viewed as outliers by FINRAand the SEC.”

Some questions answered, some raised in latest technicalFAQ

In its last formal action regarding the fiduciary rule, theoutgoing Obama Labor Department issued a 35-question technical FAQaddressing service provider and financial institution compliancerequirements under the rule.

The FAQ reiterated how the rule distinguishes advice fromeducation, and other areas that have been readily interpreted byindustry.

It also provided a number of useful clarifications, and raisednew questions by interpreting the rule in an “unhelpful manner,”said Kent Mason, a partner at Davis & Harman who advises plansponsors and service providers.

“Both the helpful FAQs and the unhelpful ones underscore onefundamental point— the April 10 applicability date is even moreunrealistic than it was before,” said Mason, who has testifiedbefore Congress as to the unworkability of the rule.

The FAQs address guidance on record-keeper recommendations,call center recommendations to increasedeferrals in order qualify for company matches, and questions aboutfee offsets to compensate 401(k) plan advisors, among othertechnical questions.

Where helpful, the guidance is “woefully late,” said Mason.

Worse, new questions raised in the FAQ will require serviceproviders to alter compliance plans. That further underscores thenecessity of the delay the Trump administration is considering, hesaid.

Mason noted what he said was an ambiguous answer on so-calledfree-dinner seminars offered by financial institutions, and whethersuch marketing events qualify as education seminars.

And Labor’s clarification that an insurance agent is a fiduciarywhen recommending life insurance on required distributions from a401(k) contradicts language in the rule, because the recommendationis on assets that were required to be distributed, and resideoutside of a qualified retirement account, explained Mason.

BenefitsPro asked several large service providers if thetechnical FAQ was enough to sufficiently prepare record-keeper callcenters for the fiduciary rule’s April 10 implementation date.

Only Fidelity responded to requests for comment, saying the firmwas still reviewing the information in the FAQ.

A request for comment from the Labor Department as to whether ithas sufficiently supplied stakeholders with the informationnecessary to comply with the April 10 deadline was notreturned.

The genie's out of the bottle

Legal experts have told BenefitsPro that the Trumpadministration will have to write a new rule if it wants to changethe existing one.

That may mean addressing how the rule redefines investmentadvice, and what the rule considers to be a prohibitedtransaction.

Roberts reminds that both a fiduciary standard and prohibitedtransactions have existed for more than 40 years under the EmployeeRetirement Income Security Act.

While there may be ways to make the BIC Exemption morefunctional, Roberts thinks the Trump administration will be boundby the rule’s intention to protect retirement investors’ bestinterests.

“We believe the genie is out of the bottle,” he said. “It willbe difficult for the new administration, from a PR and politicalperspective, to water down the rule significantly, but there may besome ways to appease all sides by lessening the burdens associatedwith the BIC Exemption.”

Related: Go to our DOL Fiduciary Rule page for more newsand analysis