Got a fiduciary wish list? The Department of Labor wants to hear from you.
The agency announced it is seeking public input on whether and how it should amend the fiduciary rule, including postponing implementation of the regulation's remaining components, currently set for the Jan. 1.
It's the latest maneuver in an ongoing struggle over the regulation's fate, which enjoys relatively broad support among the investing public as well as RIAs, but opposition from larger brokerage firms.
The SEC, meanwhile, has suggested it will take action on a fiduciary rule and coordinate with the Labor Department.
"What's happening at the Department of Labor is going to affect the markets we regulate, and vice versa," SEC Chairman Jay Clayton told members of Congress earlier this week.
EYE ON REVISION?
The Labor Department's announcement comes after Secretary Alexander Acosta opted to let the first phase of implementation go ahead on June 9. The second phase includes components such as the best interest contract exemption.
However, Acosta also said that he would fulfill President Trump's request, put forth in a February memo, that the department review the regulation with an eye to rescinding or revising it.
Advisers, firms, investors and others will have a 15-day window to have their say on delaying implementation, starting from when the Labor Department's publishes the public request in the Federal Register. The public has 30 days to give their two cents on other changes to the fiduciary rule.
PROLONGING THE DEBATE
The Labor Department's move could also be seen prolonging an already lengthy debate.
The department has held multiple comment periods on the regulation since it unveiled its proposal in 2015. Just earlier this year when the Labor Department proposed delaying the initial implementation date 60 days to June 9, it was inundated by 193,000 comments from investors, advisers and brokerage firms. The overwhelming majority ― 178,000 commenters and petitioners ― opposed any regulatory delay, the department said.
Though the rule's nuances may be controversial among industry players, its broader principles are largely supported by investors. Approximately half of clients say they would stop working with their financial adviser if they learned he or she was not required by law to serve a client's best interests, according to a new conducted by Harris Poll and commissioned by Jefferson National.
In fact, 59% of investors surveyed incorrectly believe that all advisers are already required by law to put their clients' best interests first, including disclosing fees and conflicts of interest.
About eight in 10 advisers say a fiduciary model would benefit the growth of their practice, according to the survey.
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