By Warren S. Hersch
Critics are hoping the revisions will be significant
President Trump’s flurry of executive actions since taking office is upending the established order in the nation’s capital. Financial services professionals have a huge stake in the outcome for two of them.
Those executive orders — one calling for an “updated economic legal analysis” of the Department of Labor’s fiduciary rule, the other detailing “core principles” that could gut the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — have unsettled federal oversight of financial services to a degree unseen since the end of the 2007-2009 downturn.
For industry stakeholders, the actions bring a welcome respite from impending regulatory changes for which many were ill-prepared.
That’s notably true in respect to the fiduciary rule, which was due to be phased in beginning on April 10. The myriad requirements of the DOL “conflict of interest rule,” stretching to 1,000-plus pages, had called into question business development plans for players throughout the distribution channel.
As expected, the Department of Labor filed a notice Thursday with the Office of Management and Budget to delay implementation...
“The executive order [respecting the rule] is a positive development because much of the industry wasn’t ready for the April 10 applicability date,” says Jason Smith, founder and chairman of Clarity 2 Prosperity, a Westlake, Ohio-based independent marketing organization. “Business partners I’ve spoken with — advisors, broker-dealers, and other IMOs — had all halted or substantially slowed their development efforts. The delay was definitely needed.”
Putting the rule on hold
The DOL filed on February 9 a Notice of Proposed Rulemaking with the Office of Management and Budget to delay the fiduciary rule’s implementation. The OMB’s review of the notice, expected to last 14 days before being approved and published in the Federal Register, doesn’t stipulate a new implementation date. But market-watchers anticipate a delay of up to 180 days, which would shift the original phase-in from April to October 2017. Whether the DOL thereafter elects to revise or repeal the rule may hinge, in part, on recent court rulings, all of which have sided with the DOL’s position on the rule under the Obama administration.