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DOL Fiduciary News: October 4, 2017

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Delay of fiduciary rule likely to be challenged in court; October 3, 2017

The Labor Department’s proposal to delay the full implementation of the fiduciary rule to July 2019 will likely meet a legal challenge from consumer advocate groups, according to several sources.

“If they finalize the delay as it is proposed, Labor should expect a legal challenge,” said Micah Hauptman, an attorney with the Consumer Federation of America, which filed a comment letter opposing the delay of the scheduled January 1, 2018 implementation of the rule.

The proposed delay, released in August, was opened to a 15-day period of public comment, which closed September 15.

At issue is the whether the Labor Department has adequately justified the necessity of a delay, which executive agencies are required to do under the Administrative Procedure Act.

Vanguard Asks SEC to Develop 'Best Interest' Fiduciary Rule for Brokers

Financial Advisor; October 3, 2017

Vanguard is asking the Securities and Exchange Commission to go beyond existing rules to develop a “best interest” fiduciary standard of conduct for retail brokers who provide recommendations to investors. The rule should go beyond the current “suitability” requirements overseen by the Financial Industry Regulatory Authority’s (FINRA), the $4 trillion mutual fund and asset management juggernaut said.

“Vanguard believes that retail investors should always receive investment advice that is in their best interest,” Vanguard’s Chairman and CEO William McNabb III said in a letter to SEC Chairman Jay Clayton. Vanguard wants to see regulations that will hold brokers who provide ongoing and point-in-time advice to a fiduciary duty regardless of who they work for or the products they offer.

The broker-dealer industry as well as FINRA have deftly managed to avoid a fiduciary standard up to this point.

But SEC action on a “best interest” rule for brokers is particularly important now because the portions of the Department of Labor’s new fiduciary rules that are yet to be implemented have the potential to create requirements that have no corollaries in broker-dealer or investment advisor regulation, McNabb said. 

RiXtrema's DOL Fiduciary Rule Checklist Tells Advisors What They Need to Do Now

NEW YORK, Oct. 3, 2017 /PRNewswire/ -- RiXtrema, the leading provider of risk management tools and analysis to the financial advisory and broker/dealer community to help ensure that investors get the analysis and advice they need, announced the launch of its DOL Fiduciary Rule Checklist. "Every advisor who advises on retirement account assets as of June 9, 2017, is effectively an ERISA fiduciary who must adhere to Impartial Conduct Standard and charge no more than a reasonable fee," explained RiXtrema President Daniel Satchkov. "It's essential that advisors understand this and take necessary action to comply with the rule."

In addition to the requirements that ERISA fiduciary status implies, the DOL Rule also contains requirements for very specific documentation regarding investor's best interest. The Best Interest Document must follow DOL requirements and contain specific data points regarding both the retirement plan and the IRA account. These data points will show whether a rollover or IRA-to-IRA transfer is in the best interest of the investor.  The Checklist contains seven sections dealing with various requirements of DOL Fiduciary Rule best interest documentation. Each section contains detailed specific questions with references to legislation or DOL FAQ. By going through the Checklist advisors will know exactly where they might fall short and how to fix the problem. 

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