UPDATE: According to The Wagner Law Group, President Trump issued an Executive Memorandum Friday afternoon that instructs the DOL to conduct a review and determine whether and how the fiduciary rule should go into effect. If the DOL determines that the DOL Fiduciary Rule is inconsistent with Trump Administration policy, it may issue, for notice and comment, a proposed rule rescinding or revising the DOL Fiduciary Rule and the BICE Exemption.
The law firm initially stated that implementation of the rule would be delayed for 180 days, before clarifying that no time period was specified in the final EM, and a ‘delay’ was never mentioned.
President Trump will sign an executive order Friday that will reportedly ask the Department of Labor to delay or rescind its fiduciary rule, known officially as the Conflict of Interest Rule.
The move will come as part of a larger rollback of financial regulation in general, including Dodd-Frank, passed in the wake of the financial crisis of 2008.
“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” White House National Economic Council Director Gary Cohn said in an interview with The Wall Street Journal. “The banks are going to be able to price product more efficiently and more effectively to consumers.”
Trump will use a memorandum to ask the labor secretary to consider rescinding a rule set to go into effect in April that orders retirement advisers, overseeing about $3 trillion in assets, to act in the best interest of their clients, Cohn added, claiming the fiduciary rule limits consumer choice.
The move was immediately hailed by critics of the rule.
“President Trump’s forthcoming executive actions—expected to halt the Department of Labor’s fiduciary rule and call for review of Dodd-Frank regulations—will greatly benefit middle-class investors, entrepreneurs, and consumers,” Competitive Enterprise Institute, a pro-business, free market think tank, said in a statement.
“The fiduciary rule is, by the government’s own estimates, the most expensive regulation promulgated by the Obama administration last year,” it continued. “It threatens the loss of access to investment advice and choices for millions of middle-class savers, as well the livelihoods of thousands of Main Street brokers and insurance agents.”
Supporters claim the rule is needed to protect investors from unscrupulous business practices that put sales commissions and the advisor’s interests ahead of their clients, which the Obama Administration claimed costs “$17 billion in lost savings for middle class families.”
The Financial Planning Coalition, a consortium of industry advocacy organizations that support the rule, including Certified Financial Planner Board of Standards CFP), the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA), issued the following statement:
“The Financial Planning Coalition strongly opposes the action taken today by President Trump to halt the Department of Labor’s Final Fiduciary Rule that will protect millions of Americans saving for retirement. With just two months to go before its implementation date, the President has effectively given the green light to maintain the status quo of conflicted financial advice.
“By issuing this memorandum, the President is directing the Department of Labor to produce an outcome that will likely lead to either a complete gutting of this thoroughly vetted consumer protection or lead to its outright demise. Either one is a bad outcome for American retirement savers.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
