Why work with us
Offerings for RIAs
- Technology & Platforms
- Investing & Wealth Management
- Business Solutions & Support
- Contact us
Think the DOL rule is history? Not so fast…
Skip Schweiss, 12/11/2016
Managing Director, Retirement Plan Services & Advisor Advocacy
While I haven’t checked the data, I think we can assume it’s a good time to be a real estate agent in the Washington, D.C. area. There are certainly a lot of comings and goings as the leadership landscape of our next administration takes shape.
These past few weeks, I’ve run into a lot of advisors who are wondering if the election results also spell the demise of the Department of Labor (DOL) Conflict of Interest Rule (DOL Rule, “the Rule”).
I’m here to say: Don’t count on it.
There is no magic wand to do away with a new regulation once it’s final. And it’s important to note that this rule was published in the Federal Register in April and, by law, became final 60 days later, in June. So it is final. Congress had its 60-day window to pass a bill banning the new regulation from coming into effect. They did so, and President Obama vetoed that bill. So that window has closed.
Assuming our new policymakers even want to risk the backlash of repealing a rule that has been praised as investor-friendly, repealing the DOL Rule is not an easy path.
Perhaps a new secretary of labor would seek to push back the date the Rule is set to take hold—April 10, 2017—but even that is a lengthy process. It took more than six years to create and pass the DOL Rule. My advice to advisors is to stay the course and be prepared for the April 10 compliance date.
Food for thought
Indulge me in a hypothetical scenario for a moment. As mentioned above, I don’t think the DOL Rule is disappearing any time soon, but I ask you this: Even if it is repealed, if it’s in your clients’ best interest, shouldn’t you do it anyway?
Even if the regulatory mandate was lifted, perhaps it could serve as a industry “best practice” to voluntarily hold itself to a higher standard and differentiate fiduciary advice from the rest. I’d love to hear your thoughts on that.
What about the Securities and Exchange Commission (SEC)?
As I’ve shared, I’ve been on the road and speaking about the DOL Rule with advisors every week. I’m often asked if I think the SEC will come out with a similar rule. In many ways, it would make sense to create more uniformity between the way retirement and nonretirement accounts are regulated.
While I’ll never say never, I don’t think the SEC will follow the DOL’s lead and forge ahead with a similar rule any time soon. Why? There is currently no similar rule proposal on the table. And if we fast-forward to a new SEC chairman appointed by a pro-business president, logic dictates that it would not come about during the new SEC chairman’s tenure. In addition, of the five presidentially appointed commissioners, there are currently two openings. Once these positions are filled, we can assume the SEC will lean Republican for the duration of the Trump administration.
Other SEC proposals that may stall include business continuity and third-party exams. We’ll also be watching the Financial Crimes Enforcement Network (FinCEN) proposal to include RIAs in the definition of “financial institution” for purposes of applying anti-money laundering rules (AML). Be assured that I’m keeping a close eye on these issues and will keep you informed.
On a personal note, 2016 began for me like most other years. Then came April, and I went from a couple of business trips a month to being on the road more days than I’ve been able to count.
I’ve been meeting with advisors across the country to help shed light, and provide guidance and encouragement about the DOL Rule and its implications. The best part is that I’ve been able to meet so many of you, face to face. Hearing from you is so helpful—not to mention enjoyable—as I continue my mandate of “Advocating for You.”
I’ve been able to carve out a few weeks in December to stay in town and spend more time with my family. And, I’m really looking forward to it!
I hope that this holiday season is a special one for you and your family. We have a lot to do next year. Rest, recharge, and enjoy.
I look forward to seeing you in 2017.
Content provided is for educational purposes only and is not intended to be advice for any firm.
Call 800-934-6124 and talk to one of our experienced consultants today.
Complete this form
And we'll reach out to start the conversation.
Thank you for your interest. We treat each inquiry with the highest confidentiality. We're getting your question into the right hands and someone will be in touch with you shortly. We look forward to helping you.