By letting the fiduciary rule’s June 9 deadline stand, Secretary of Labor Alexander Acosta may be placing the proverbial cart before the horse for financial advisers and industry suppliers.
Tim Rouse, executive director of the
While his organization never opposed the regulations, it did lobby the Office of Management and Budget and others for a longer implementation period as far back as early 2016.
One concern of his was having adequate time to make sense of recently issued Q&As and seek clarity on what Rouse calls the rule’s general “murkiness.” For example, he wonders why the action of a plan sponsor or recordkeeper encouraging participants to start saving in their 401(k) plan would qualify as rising to the fiduciary level.
About six months ago, SPARK released best practices on data that recordkeepers could share with broker-dealers to help facilitate the new regulations. The group represents recordkeepers, mutual fund companies, brokerage firms, insurance companies, banks, consultants, trade clearing firms and investment managers.
Sound policy
Despite any perceived confusion in the face of a looming deadline, brokers and advisers shouldn’t overlook that the fiduciary rule is a sound public policy, according to Barbara Delaney, a principal with StoneStreet Advisor Group, LLC.
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“I’ve always thought the fiduciary rule in general terms is in the best interest for clients, and particularly plan sponsors,” says Delaney, EBA’s 2014 Retirement Adviser of the Year. “From a general perspective, having the Department of Labor now being part of the financial services industry oversight is a huge milestone.”
While financial advisers will be focusing on the June 9 deadline for handling IRAs and the fiduciary rule’s distribution piece, Rouse also cites another important date. By Jan. 1, 2018, he says their attention will shift to compliance on the rule’s advice and best interest contract exemption (BICE) components.
Between now and then, there still could be new topsoil laid across the industry landscape. “It does not legally mean that the rule will not still be terminated, changed, etc., because the evaluation period is technically still open,” says Rob Massa, director of retirement at Ascende, a division of EPIC. That period will continue until the fall or even January when the rule is completely implemented, he adds.
Still, his long-held belief is that there is always “going to be some version of this fiduciary rule in place.”
