Employers who sponsor retirement plans are already fiduciaries, so it will continue to be their job to make sure their retirement-plan service providers are working in the best interest of their employees, says Shelby George, senior vice president, advisor services, for Manning & Napier, an investment management company.
"Respect for the rule of law leads us to the conclusion that this (June 9) date can not be postponed", Acosta wrote in an op-ed piece in The Wall Street Journal. "Certainly, it is important to ensure that savers and retirees receive prudent investment advice, but doing so in a way that limits choice and benefits lawyers is not what this administration envisions". Acosta wrote in a Wall Street Journal op-ed posted this evening that he had reached the conclusion that the Administrative Procedures Act, which governs federal rulemaking, would not allow a further delay.
"The Labor Department will roll back regulations that harm American workers and families", he said.
The securities industry's major concern is that as of January 1, 2018 when the rule's best-interest contract (BIC) exemption takes effect for retirement accounts, customers will be able to participate in class-action lawsuits charging violations of the rule's prudence and loyalty standards that go into effect next month.
"If Secretary Acosta truly respects the will of the people, he will stand up to the industry lobbyists who want a fiduciary standard in name only", continues Roper, "and he will proceed with implementation of a rule that puts real teeth into the best interest standard by making it legally enforceable and by reining in practices that encourage and reward advice that is not in customers' best interests". The rule is meant to discourage brokers and other financial professionals from putting retirement-plan assets into products that pay high commissions or profit-sharing compensation to the brokers-a practice that's now legal as long as the investments can be portrayed as "suitable" for the customer.
Many Trump supporters and financial advisers were sure to be frustrated as news of the administration's decision spread Tuesday morning. The initial phase of the rule's implementation will begin June 9.
Trump ordered a review of the rule on February 3, with White House Press Secretary Sean Spicer calling it "regulatory overreach" by the Labor Department.
The stocks of publicly traded independent and regional brokerage firms were initially battered by Secretary Acosta's decision to let the rule implementation proceed.
The DOL also "intends to issue a Request for Information (RFI) in the near future seeking additional public input on specific ideas for possible new exemptions or regulatory changes based on recent public comments and market developments". The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.