As many predicted, the Department of Labor's pending fiduciary regulation is now up in the air under U.S. President Donald Trump's new administration. But is the controversial DoL rule (also known as the fiduciary reg and the conflict of interest rule) still going to take effect in two months or not? Fundsters, broker-dealers, and advisors do not yet have an answer.

Jason Roberts Pension Resource Institute CEO

Trump's executive memorandum, issued on Friday as expected and discussed by White House press secretary Sean Spicer, does not include the 180-day delay of the DoL rule that had been in a leaked draft of the memo, our sister publication 401kWire reports. The memorandum does direct to the DoL "to prepare an updated economic and legal analysis concerning the likely impact of the Fiduciary Duty Rule," but without an official delay of the reg and with Trump's pick to the lead the DoL still stuck in confirmation limbo himself, financial services firms are left wondering what to do or not do in advance of April 10.

On Friday afternoon Ed Hugler, a career DoL insider now acting as Secretary of Labor, stated that the regulatory agency "will now consider its legal options to delay the applicability date" of the fiduciary reg.

Jason Roberts, a veteran ERISA attorney and consultant who works with B-Ds and RIAs, tells RIABiz that "regardless of what camp you're in, nobody won." ERISA attorney Marcia Wagner tells the pub that the ambiguity "is actually scary." Groom Law Group's Michael Kreps tells Reuters that "we don't have certainty yet" from the memorandum.

"This executive memorandum creates additional uncertainty for broker-dealers and other institutions," Josh Lichtenstein, attorney at Ropes & Gray, agrees in an emailed statement. "Until we receive further guidance from the government, financial institutions must decide whether to halt work under the rule and risk being caught unprepared or to continue working on compliance plans which may need to be revised if the rule changes or is repealed."

The Wall Street Journal and InvestmentNews highlight the fiduciary reg plans of three of the four wirehouses and of other big B-Ds. Many of those firms have spent millions of dollars and lots of time preparing for the fiduciary reg, and so far it sounds like most don't plan to scale those plans back despite Trump's Friday move. Indeed, Barron's echoes industry consensus that "it's probably too late change course" in terms of industry practices, regardless of what the DoL ends up doing with the reg. 

Edited by: Neil Anderson, Managing Editor


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