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Fiduciary Rule’s Third Iteration Could Come with Sharp Regulatory Teeth

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This article originally appeared on FinancialPlanning.com by Dina Hampton.

A Department of Labor reevaluation of the bloodied-but-still-standing fiduciary rule could well result in its restoration to Obama-era levels of stringency, advocates say.

The Employee Benefits Security Administration plans to issue a Notice of Proposed Rulemaking addressing the definition of fiduciary, according to the Labor Department’s just-released Spring 2021 Regulatory Agenda.

Regulatory rulemaking schedules can be a moving target and do not always lead to tangible results. But Barbara Roper, director of the Consumer Federation of America, is optimistic that a fiduciary rule with teeth will emerge from this process.

“I think they have been as clear as possible that their intent is to do rulemaking in these areas,” Roper says, noting the guidance the Biden Labor Department has already issued regarding conflicts of interest and impartial conduct standards — restoring provisions that the Trump administration previously stripped.

. . .

Ron Rhoades, a long-time fiduciary advocate, and currently a financial advisor at ARGI Investment Services, agrees that the Labor Department means business.

“[It] will dramatically expand the number of advisors that will be fiduciaries under ERISA,” Rhoades says. “Instead of now, where it’s actually fairly easy to not be a fiduciary under the Trump administration rule, it will likely become very difficult to not be a fiduciary.” In the end, he says, there’s likely to be “a strengthening of rule.”

Knut Rostad, president of the Institute for the Fiduciary Standard, adds to the chorus of optimistic voices. “I’m upbeat,” he writes in an email. “The administration’s instincts are right and [U.S. Secretary of Labor Martin] Walsh is a fighter. The issue is avoiding a successful legal challenge. The odds are good a rule with teeth makes it.”

Read the full article on FinancialPlanning.com.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture