The U.S. Department of Labor (DOL) will announce its final fiduciary rule on Tuesday afternoon, according to the American Retirement Association (ARA).
The ARA confirmed on Monday that acting Secretary of Labor Julie Su will announce the final regulation in a Treaty Room ceremony at 5 p.m. ET.
The DOL had wrapped up its review of the rule and subsequent comments on April 10, and it was widely believed by industry experts that the final regulation would be released soon after.
Critics have condemned the federal regulator of expediting the reviewal process in order to advance the final rule prior to the November presidential election.
Tuesday morning, the Insured Retirement Institute (IRI) issued a statement from its President and CEO Wayne Chopus in advance of the today’s release:
“Instead of advancing this unnecessary and redundant rule today, DOL should have withdrawn it.”
IRI President and CEO Wayne Chopus
“IRI is not optimistic that DOL’s final rule will heed the substantial stakeholder input and data indicating that this rule will inflict significant harm on consumers. IRI expects the regulation to reflect similar traits of DOL’s failed 2016 rule, which was vacated by a federal appeals court in 2018.
“In the brief time the 2016 rule was in effect, it caused millions of consumers to lose access to the professional financial guidance of their choice and to products and strategies to help them achieve a financially secure retirement. We anticipatetoday’s final rule will produce comparable or worse outcomes.
“This regulation is the product of a severely flawed rulemaking process and defies applicable judicial precedent and the limitations on DOL’s rulemaking authority as established by Congress. Instead of advancing this unnecessary and redundant rule today, DOL should have withdrawn it.”
In a letter addressed to the DOL last Monday, a group of insurance trade organizations, including IRI, the American Council of Life Insurers, and the National Association of Insurance & Financial Advisors, accused the agency of rushing through its procedure. The letter criticized the regulator for allowing a “historically short comment period” on the proposed rule, and then for reviewing the comments in only a few weeks. The DOL is generally allowed to take up to 90 days in its evaluation.
“It is paramount that the rulemaking process include careful scrutiny and a robust public policy dialogue. We have grave concerns regarding DOL and the Office of Information and Regulatory Affairs’ [OIRA] extremely short review of a major rule that displayed little interest in public input and collaborative discourse,” wrote the organizations.
The final rule would amend and expand the regulatory definition of investment advice to add other entities, including insurance agents and organizations. While rule supporters believe the change would close a regulatory gap in financial advice, opponents say the rule would unfairly subject professionals to ERISA litigation.
However, the DOL maintains that the regulation would balance rules in providing advice for all financial professionals. “We’re trying to the extent possible to make this not so difficult and to draw upon what works for everyone so we can have just one level playing field,” said DOL Assistant Secretary for EBSA Lisa Gomez, in a sit-down interview with ARA CEO Brian Graff during the NAPA 401(k) Summit in April. “How can we best do that so that we can end up at the other side in a better place where people know what’s expected of them and people know what to expect of investment advisors?”
EDITOR’S NOTE: This article has been updated to include information provided April 23 by the Insured Retirement Institute.
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