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DOL Fiduciary News: April 10, 2017

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New Retirement Rule Is Delayed, but Not Its Impact

The Wall Street Journal; April 8, 2017 8:00 a.m. ET

Some brokerages are forging ahead with a new retirement-savings rule even though the Trump administration has postponed—and could cancel—its implementation.

The fiduciary rule was set to take effect on Monday, but the Labor Department has officially delayed it for 60 days starting April 7. In that time, the department can revise it, rescind it or request another delay.

The rule would have required brokers who oversee $3 trillion in tax-advantaged retirement savings to act in their clients’ best interest. That is a stricter standard than many brokerages were using. After the rule was unveiled in April 2016, some brokerages moved clients from commission-based accounts that could run afoul of the rule to fee-only accounts.

Did the fiduciary delay create new problems?

Financial Planning; April 07 2017, 9:08am EDT

PHOENIX ― The Department of Labor's 60-day postponement of the fiduciary rule ― just a week before the regulation was due to be implemented ― may have created more problems for the industry than it solved.

On one side, fiduciary advocates are pushing back, arguing that the regulation is a much needed investor protection that can't be delayed. On the other, opponents are concerned the delay doesn't give the department time to conduct the review ordered by President Trump. Moreover, if the regulation is revised, some firms are concerned they will have to adapt compliance systems yet again, and on short notice.

Darryl Metzger, director of the private client group at Hilliard Lyons, likens it to changing the rules of a football game after the teams are already on the field.

Why Your Financial Adviser Can’t Be Conflict Free

The Wall Street Journal; April 7, 2017 3:58 p.m. ET

All financial advisers—like all people who perform a service for anyone else, including journalists—have conflicts of interest. That’s true regardless of whether they work for someone else or for themselves, whether they earn fees or commissions, or whether they call themselves “fiduciaries” who put clients’ interests ahead of their own.

Investors should bear that simple truth in mind as the Labor Department announced this past week that it would delay a rule requiring anyone providing specific investment advice on retirement accounts to minimize conflicts of interest.

And you should be wary of financial advisers who aggressively market themselves with the label “conflict free.” No matter how sincerely they may believe it, that description is impossible.

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