DOL delays fiduciary rule enforcement to June 9
- The Department of Labor pushed back implementation of the fiduciary rule from April 10 to June 9, Employee Benefit Adviser reports. The delay comes as part of a Feb. 3 presidential memorandum calling for the Labor Dept. to examine the rule in order to make sure it doesn’t adversely affect plan participants.
- The fiduciary rule requires plan sponsors and financial advisors to act in plan participants’ best interest rather than their own. The Obama administration intended on using the rule to crack down on practices like inflating fees and giving less-than-sound financial advice.
- EBA says some observers see the delay as an end to the rule, while others think the rule will survive, but in another form. However, most employers have already adjusted their plans to comply with the rule and avoid lawsuits by plan participants.
Besides accommodating the presidential memorandum, the DOL’s delay is also a response to the volume of commentary it has received, both for and against the rule. The 90-day moratorium gives the department time to sift through comments and revise or rescind the rule, if necessary.
It's very much a crossroads for the Trump administration; the White House issued an executive order to delay enactment of the rule just hours before a federal judge upheld its legality. That makes it much harder for the rule to be scrapped altogether. Republicans are essentially hoping to delay the rule as long as possible, viewing it as another unnecessary regulation on the private sector.
The rule’s opponents filed several lawsuits to obstruct it. But employers should keep in mind that before DOL issued the rule, plan sponsors were already considered fiduciaries. Many acted in the plan participants’ best interest as a show of good faith. Others feel they have an ethical responsibility to do so.
As employers wait for further action on the rule, HR should continue closely vetting plan vendors and financial advisers to protect plan participants’ investments and ensure they receive honest advice. It's also important to take note of the private sector's coming impact on employee finance: Robo-advisers, after all, may very well be the future.