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DOL Fiduciary News: May 24, 2017

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Labor secretary Alexander Acosta gives DOL fiduciary rule supporters something to cheer about — at least for now

InvestmentNews; May 23, 2017 @ 2:00 pm

Major parts of the Labor Department fiduciary rule will kick in June 9, but how much of the rest of it will survive remains uncertain.

Labor Secretary Alexander Acosta announced in a Wall Street Journal op-ed Tuesday that the initial implementation date of the rule, which has already been delayed from April 10, will not be extended beyond the June date. He also said that the agency will gather more public comment for a reassessment of the rule that President Donald J. Trump ordered in February. That review could lead to an overhaul of the regulation.

Mr. Acosta's decision not to push the implementation deadline beyond June 9 is a victory for supporters of the rule, which will require financial advisers to act in the best interests of their clients in retirement accounts. On that date, two provisions will become applicable. One expands the scope of advisers who must act as fiduciaries and the other establishes impartial conduct standards.

Fiduciary Rule Survives Critics for Now

The Wall Street Journal; May 23, 2017 5:24 p.m. ET

The Labor Department cleared a landmark retirement-savings rule to take effect next month, ending a stretch of uncertainty for brokers and investors after President Donald Trump called for a review of the Obama-era regulation with an eye toward repeal or revision.

The so-called fiduciary rule—which aims to eliminate conflicts in financial advice and ensure that brokers put the interests of retirement savers first—was originally due to come online in April but was delayed for 60 days as part of the review. Labor Department Secretary Alexander Acosta surprised many across the brokerage and insurance industries by recommending, in a Wall Street Journal opinion piece late Monday, against a further delay in the rule.

While Mr. Acosta preserved the possibility of revision or repeal of the rule as the Labor Department continues its economic review, the decision to let the regulation come into effect June 9 effectively makes it harder to reverse later. This is because firms across the country have to communicate compliance changes to clients, including disclosures about how clients are charged and commitments to put customers’ interests first.

RIAs and broker-dealers charge ahead in prep for DOL fiduciary rule

InvestmentNews; May 23, 2017 @ 3:04 pm

Registered investment advisers and broker-dealers are taking the Department of Labor's decision to decline another round of delays for the fiduciary rule in stride.

Indeed, it looks to be business as usual for registered investment advisers, although some firm heads discussed this morning the need to be even more vigilant with respect to record-keeping, especially with individual retirement accounts, to be able to show they're acting in clients' best interests.

"I thought the rule was going to die on the vine or be punted in perpetuity, so I am pleasantly surprised to see that it's moving forward," said Douglas Boneparth, president of Bone Fide Wealth. "This is ultimately good for Americans and the financial services industry."

After spending millions of dollars to prepare for the new rule, some large brokerage firms were mum on the DOL fiduciary regulation becoming applicable next month.

DOL Rule Is Seismic Shift for Advisors

Financial Advisor; May 23, 2017

Labor Secretary Alexander Acosta’s announcement that the new fiduciary rule will go into effect June 9 as planned will dramatically impact the lives of financial advisors who deal with retirement plans, according to advisors, lawyers and consultants.

Full implementation of the rule for broker-dealers and advisors is still set for Jan. 1, but the portions effective June 9 represent a seismic shift for many advisors, who have been preparing for months, industry insiders say.

Even before it was declared valid by Acosta on Monday, the rule already has pushed firms to abandon commission products and move to fee-based advice and enact measures to promote transparency. Advisors are required under the rule to put the best interests of the client first, have impartial standards and reasonable compensation, and not make any misleading statements.

ACLI on Labor Secretary Acosta's Fiduciary Regulation Decision

American Council of Life Insurers President & CEO Dirk Kempthorne issued the following statement on Department of Labor Secretary Alexander Acosta’s announcement that the applicability date of significant provisions of the fiduciary regulation will not be delayed beyond June 9:

Washington, D.C. (May 23, 2017) – “The American Council of Life Insurers (ACLI) is disappointed that on June 9 a regulation will go into effect that significantly harms consumers’ ability to plan and save for financially secure retirements. Even Labor Secretary Alexander Acosta acknowledges that the fiduciary regulation needs further review.

“As currently written, the regulation limits retirement savers’ access to education and information about annuities, the only financial products in the marketplace that guarantee lifetime income.

In new fiduciary rule FAQs, DOL gives quasi-endorsement of clean shares

InvestmentNews; May 23, 2017 @ 2:22 pm

The Department of Labor, in a recently released set of frequently asked questions related to its fiduciary rule, gave an endorsement of sorts to clean shares, saying the new mutual-fund share class represents one of the "most promising responses" to have emerged since the retirement regulation was issued last year.

While alluding to "other innovations," clean shares are the only product the DOL explicitly calls out in the FAQs as an "innovative" development.

"Assuming the compensation is reasonable, such an approach is a potentially powerful means of reducing conflicts of interest with respect to mutual fund recommendations and correspondingly reducing the need for heightened surveillance around adviser conflicts of interest," the DOL said of clean shares.

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