With less than four business days to go before the April 10 implementation date of the Labor Department’s fiduciary rule, the Office of Management and Budget is still taking meetings with prominent supporters of the rule.
The AARP and the CFP Board of Standards, both of which lobbied against the proposed 60-day delay currently under review at OMB, met with regulators as recently as April 3.
The last-minute input from stakeholders may or may not be an indication of whether a delay of the rule’s implementation date will be issued before next Monday, April 10.
Many stakeholders have presumed that a delay would indeed be issued before April 10.
In a field assistance bulletin issued by Labor in March that offered temporary compliance relief in the event a delay was issued after April 10, regulators said the Department intends to decide on the proposed delay before next Monday’s scheduled implementation date.
Notwithstanding that intention, the ability to delay the implementation date before next Monday is not a decision that is entirely in the Labor Department’s hands, said Erin Sweeney, an ERISA attorney with Miller & Chevalier.
“The OMB is a completely separate entity,” Sweeney told BenefitsPRO, suggesting that the ability to delay the rule before its scheduled implementation date would come down to OMB’s own standard of review. “The DOL isn’t in control of everything on this.”
The bottom line, says Sweeney, is that it’s not safe to assume a delay will be finalized by April 10. “Hopefully we will get a final rule published before April 10, but I’m not optimistic.”
Last November’s Presidential election threw the fiduciary rule, and regulated stakeholders, into a state of limbo.
Immediate post-election predictions of the rule’s demise were tempered, as the Trump administration remained mostly silent on the matter throughout the transition phase and early days of its administration.
Even the February 3 Presidential Memorandum on the fiduciary rule kept open the possibility that at least some aspects of the rule’s primary provisions would survive.
“One of the priorities of my Administration is to empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies,” President Trump wrote in the memo.
The memo instructs the Labor Department to undertake a new analysis of the rule to test its ultimate compatibility with the priority of facilitating the country’s ability to save for retirement.
Proponents of the fiduciary rule interpreted the Presidential memo and its priorities as being aligned with the intent and letter of the fiduciary rule.
The memo also gave Labor specific directions to vet the rule’s implications on the cost of retirement advice and access to it. Some interpreted those instructions as being aligned with opponents’ criticisms of the rule.
In spite of the continuing ambiguity, advisory firms have been moving ahead as quickly as they can under the assumption that the rule will be implemented as written on April 10, knowing there is a “fair possibility” that it won’t be, said Sweeney.
Employer plan sponsors have not had that option, said Sweeney. The rule’s implications on advice modules built into 401(k) plans have forced employers to hit the pause button until near-term clarity on the rule’s implementation date, and its ultimate impact on sponsors’ fiduciary obligations under ERISA, are more certain, said Sweeney.
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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.
