DOL in Open Revolt Over Fiduciary Rule Delay

The Wall Street Journal takes Labor to task

401k, fiduciary, Trump, Department of LaborIs it protecting or defying the will of the people?

Russia, immigration, health care—Trump has bigger fish to fry, so don’t expect much movement with the fiduciary rule one way or another. That was the generally accepted attitude in the aftermath of the election and something pundits and politicos routinely pitched. They were (very) wrong.

Just how wrong is detailed by The Wall Street Journal Wednesday in a scathing op-ed that employs words like “mutiny” and “rebellion.” It describes attempts by the bureaucracy (which we assume to mean DOL rank-and-file) to resist the president’s regulatory overhaul, with the fiduciary rule as casus belli.

The short take is that there’s a Deep State of sorts operating within the department that’s determined to see the rule through, President be damned.

“[Trump] asked Labor to investigate whether the rule is likely to reduce access to retirement-savings vehicles or related financial advice, whether the rule has caused disruptions in the industry that may harm retirees and investors, and whether it will lead to more lawsuits,” the Journal recaps in what is now rote for 401k advisors.

The response?

Holdovers from the Obama Administration said that “the Department has concluded it would be inappropriate to broadly delay application of the fiduciary definition and Impartial Conduct Standards.”

In other words, “We don’t care what an elected President says,” the paper helpfully translates.

It’s all part of a broader strategy to delay. No, not the rule’s implementation, but rather its repeal. If it gets too far down the road, its proponents reason, it’ll be too entrenched to do anything about, with the (then) high cost of killing it acting as deterrent.

“The slow pace of Trump nominations has encouraged this kind of rebellion across the executive branch, as Obama holdover Sally Yates showed when she still ran the Justice Department,” the paper concludes by way of proof. “Mr. Trump’s deregulation project is one of the keys to faster economic growth, and he needs his people on the job as fast as possible.”

Prevent defense, running out the clock; a poor way to play football, worse with policy. As much as we might not like to admit, elections have consequences. The DOL’s stall tactic, while noble in theory, only serves to further inflame an already volatile political and regulatory situation. It’s unhealthy for investors, our industry and the country as a whole.

4 Comments on "DOL in Open Revolt Over Fiduciary Rule Delay"

  1. Gerald Johansen | April 13, 2017 at 4:04 pm | Reply

    The DOL backing the fiduciary ruling is unhealthy? The intent of the ruling was to protect retirement savers from self serving financial sales people…and it is not good for investors?? Baloney! Glad to hear the DOL is standing up and doing the right thing….unlike the self serving financial sales force!

  2. Michael Smith | April 13, 2017 at 4:50 pm | Reply

    I’m curious what industry you’re in or were in Gerald so I can make uninformed comments about it’s regulations or standards as well as those who work within it. To make a blanket statement about an entire industry’s sales force, “the self serving financial sales force” is not only foolish but irresponsible.

  3. You admit that “The DOL’s stall tactic, while noble in theory,”
    is right but wrong to resist the president. Sorry, resistance is the mood he has created. This rule never interfered with anything but picking an unqualified adviser.

  4. AmazinglyTotalitarians | April 14, 2017 at 8:17 am | Reply

    How sad it is to see how little people know about the consequences of both the DOL’s rule and lawless regulatory bodies. I hope none of you who would force index funds on the public at any cost won’t have the DOL knocking on your door, creating their own laws when they determine you’ve broken theres!
    The rule is set to cost more than $1,000 per client per account… and, my dear colleagues, the DOL will be coming after you if you recommend too many rollovers to your management. LOL it doesn’t interfere with anything!

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