As Donald Trump was officially sworn in as the 45thPresident, he was without a sitting Labor Secretary.

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Outgoing Secretary Thomas Perez is being considered to chair theDemocratic National Committee, a role that would put him at the topof his party’s stratosphere.

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Related: See our DOL Fiduciary Rule page

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At a recent forum featuring candidates to lead the DNC, Perezsaid Democrats need to hit Trump “between the eyes with atwo-by-four and treat him the way (Sen.) Mitch McConnell treatedBarack Obama.”

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As Labor Secretary, Perez struck a much more diplomatic toneadvancing the agency’s aggressive agenda under the Obamaadministration.

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Asst. Sec. of Labor Phyllis Borzi (Photo: AP)
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By one measure, Perez’s potential ascendance to the head of theDemocratic Party is testament to his success leading a LaborDepartment that may ultimately be regarded as the most active inmodern time.

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As far as the country’s retirement landscape is concerned, thereis little debate as to the historical influence of Perez andAssistant Sec. Phyllis Borzi (pictured) head of the EmployeeBenefits Security Administration and the chief architect of thefiduciary rule.

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Related: Changes coming to 401(k) callcenters

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No matter the fate of the rule under the Trumpadministration—the incoming Labor Secretary will have the power todelay the rule’s April 10th implementation date—Perezand Borzi’s impact on the retirement industry and investors is afait accompli, says Barbara Roper, director of investor protectionat the Consumer Federation of America.

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A "lasting" legacy

Barbara Roper, Consumer Federation of America

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“They can rest assured that they have left a lasting legacybehind them that will improve the retirement security of millionsof Americans,” said the CFA's Barbara Roper (pictured), a leadadvocate for the regulation throughout the long rulemakingprocess.

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That it was the Labor Department, and not the Securities andExchange Commission, that delivered what Roper calls “the mostsignificant improvement in investor protections in a generation,”underscores the historical influence of the outgoing leadership atLabor.

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While the Trump administration has given little indication oftheir intentions for the rule, the consensus amongstakeholders is that a delay is likely.

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If that is the case, retirement investors will still come outahead, says Roper.

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“Although industry’s attacks on the rule have been reenergizedsince the November election, many of these benefits will persistregardless of the rule’s ultimate fate,” she said.

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“Even before the formal implementation date, the rule isrevolutionizing the way retirement advice is offered, particularlythrough commission-based accounts,” added Roper, citing the recentproliferation of new, lower cost share classes of mutual fundsthroughout the industry.

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“Each day we hear a new announcement of how financial firms areimplementing the rule in ways that preserve access tocommission-based advice while eliminating the most toxic conflictsassociated with advice, just as DOL intended,” said Roper.Opponents of the rule have long argued its Best Interest ContractExemption effectively prohibits commission-based sales ofinvestments.

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“All of these developments are directly attributable to therule’s requirement that firms eliminate practices that encourageand reward advice that is not in customers’ best interests,” sheadded.

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A “destructive” legacy

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John Berlau, Competitive Enterprise Institute
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For opponents of the rule, the jury is still out on Labor andthe EBSA’s legacy under the Obama administration.

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“If the rule goes through, then Labor’s legacy will clearly be avery destructive one,” said John Berlau (pictured), a senior fellowat the Competitive Enterprise Institute, a think tank thatadvocates for free market economic principals.

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CEI and Berlau have recommended the Trump administration delaythe fiduciary rule indefinitely until it can be repealed, and saysthe issue needs to be a top economic policy initiative in the nextadministration.

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“By the government’s own estimates, the rule is the mostexpensive regulation of 2016,” said Berlau. “The Labor Departmentflat out rejected the approach of requiring more disclosures thatwould differentiate brokers from fiduciary advisors. The rule hasalready caused unnecessary disruption and is limiting options inretirement investing. It will make financial guidance moreexpensive.”

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Among the legal challenges to the rule is the question ofwhether the Labor Department acted outside its statutory authorityby creating new private right of action that gives retirementinvestors the ability to sue providers under class actions.

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Asst. Sec Borzi has said that provision of the rule is neededfor enforcement. Several sources have told BenefitsPro that thepower the rule gives to the plaintiffs’ bar is among Republicanlawmakers’ primary concerns.

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“The private right of action proves how outrageous andunworkable this rule is,” said Berlau. “You are going to getthousands of different decisions by different courts. People won’tknow what a best interest investment standard is—it will be in theeyes of the beholder.”

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Stripping the private right of action from the rule would onlysucceed in making it “less bad,” says Berlau.

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Congressional Republicans remain committed to blocking the rule.That they went to the extent of passing a resolution to block itunder the Congressional Review Act last year is proof of that, saysBerlau.

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“They don’t go that far for every piece of regulation—I thinkthere were only four or five votes under the CRA last year.”

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If the Labor Department under the Trump administration does notmove to delay the rule before its April 10thimplementation date, Berlau expects Republicans to take mattersinto their own hand via the budget reconciliation process.

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“But it won’t be without a fight,” said Berlau.

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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.