The Department of Labor will delay its fiduciary rule Wednesday morning.
News of the Labor Department's plans were disclosed in a filing by the Justice Department in the the Fifth Circuit Court of Appeals. The DOJ said drafting is "nearly complete." The move would delay the applicability of the Dodd-Frank-mandated fiduciary rule, which would require financial advisers to act in the best interest of their clients saving for retirement. It was set to go into effect April 10.
The rule has become a point of contention in Washington and in finance. Proponents say it is a necessary step to address conflict of interest in investment advice and ensure advisers put their clients first, not their compensation packages. Detractors say it hamstrings advisers.
On March 1, DOL officials proposed extending the effective date to June 9. The Department of Labor is also taking public comments on President Donald Trump's Feb. 3 memorandum directing it to examine the fiduciary rule to determine whether it might adversely affect the ability of Americans to gain access to retirement information and financial advice. The 60-day delay will give the department time to collect and consider information related to the issues raised in the presidential memorandum, the DOL said.
The delay was praised by Investment Company Institute President and CEO Paul Schott Stevens. "Additional time is critically needed," he said, noting that President Trump directed the Labor Department to review the fiduciary rule and determine whether to rescind or modify it.
"The Department acknowledges that it is not likely to complete its required examination of the fiduciary rule by June 9. If the DOL does not act by June 9-either to make such a determination, or to further delay the applicability of the rule and any condition of its related exemptions-it risks creating significant market disruptions that will reduce retirement savers' access to retirement products, services, and related financial information and advice," Stevens warned. He called upon the DOL "to minimize any harmful impact on the retirement market while that review is completed."