The Obama administration is leaving little to chance with theDepartment of Labor’s proposed fiduciaryrule.

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According to reporting in Politico, sources inside theadministration say the DOL could be sending its finalized rule tothe Office of Management and Budget as early as this week.

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If not by then, the OMB should have the DOL’s revisions to itsproposal by the end of the month.

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Barbara Roper, director of investment protection at theConsumer Federation of America and aleading advocate for DOL’s rule, recently told BenefitsPro that theOMB’s review of the rule could take as few as 50 days, but that a95-day review period is typical for a rule of the magnitude of theproposed fiduciary rule.

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Read all the latest coverage on DOl fiduciaryrule

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After the OMB’s review, the Congressional Review Act requires a60-day period of review by lawmakers on Capitol Hill.

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The proposal is the culmination of a more than five-year effortby the Obama Labor Department to address what it says are inherentconflicts of interest in the distribution of retirement productsand advice to the IRA and defined contribution markets.

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As proposed, the rule’s amended prohibited transactionrestrictions and Best Interest Contract exemption would effectively outlaw commission-based sales ofproducts and advice, argue opponents of the rule.

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It may also restrict how service providers can educate 401(k)plan participants, effectively raising them to the level of afiduciary. As is, service providers are not automaticallyconsidered to fiduciaries.

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Many ERISA experts and industry analysts have said the proposedrule will move product and advice providers to a fee-basedcompensation model, similar to the one now applied by most RIAfiduciaries.

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That could create unintended consequences, argue opponents ofthe rule.

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Under a fee-based model, some investors will end up beingcharged more for advice than they would under a commission-basedstructure, while other smaller account holders will be dropped byadvisors and providers, as their accounts will become too costly toadminister under the proposal’s vast new disclosure requirements,say the DOL’s opponents.

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Proponents of the rule, including regulators at the upperreaches within the Employee Benefits Security Administration, thearm of Labor that is crafting the new regs, argue the proposal doesnot ban commission based sales, but simply insists a higher bar forprice disclosure that will assure retirement savers won’t lose outto conflicted advice.

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The timing of when the OMB receives the rule has significantconsequence. In initiating the OMB review as soon as possible, itis believed the Obama Administration can assure a rule will beposted before the end of the president’s final term.

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Yet others have suggested moving too quickly could provide thegrist for legal challenges to the rule.

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Irrespective, stakeholders need to be changing course now, saysRob Foregger, co-founder of NextCapital, which provides thesoftware behind white labeled managed accounts for 401(k) planssponsors and participants.

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“Industry needs to shift from debate to action,” said Foreggerin an interview.

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“The question is no longer whether or not the proposed fiduciarystandard will happen, the question now is—should my firm implementscalable personal advice,” he says.

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NextCapital and other fintech firms are positioning to benefitfrom a new rule.

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Foregger notes that the architects of the proposal, includingLabor Secretary Thomas Perez, have explicitly said technology isbeing counted on to help actualize the proposal’s core intention—todrive the cost of retirement investing down.

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“Incumbent institutions serving the retirement market are wellpositioned to lead in this market transformation, but many need toreconfigure their business and delivery models now,” saidForegger.

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“This is the most profound change in financial regulation sincethe repeal of Glass Steagall,” he added, referencing the 1999legislation that allowed financial institutions to cominglecommercial and investment banking interests.

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Rebalance IRA, a Palo Alto-based firm that pairs technology andtraditional human advice to deliver low-cost advisory oversight toIRA accounts, is also positioning to benefit from a new rule, saysco-cofounder Scott Puritz.

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“If the rule adopted is similar to last year’s draft, it’s goingto have a profoundly positive and transformative impact on thepersonal finance industry,” said Puritz, who has testified beforeCongress in support of the DOL.

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“Mandatory disclosure provisions will arm consumers with moreinformation about retirement investment costs so they can makeinformed decisions,” he added in a statement to BenefitsPro.

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Heightened disclosure requirements and the establishment of anindustry-wide fiduciary standard will have a “healthy” affect onthat component of the industry that has relied on commissions and a“sales-driven approach” to retirement investing, said Puritz.

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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.