Obama-era rule on financial advisers to go forward, for now

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The controversial US "Fiduciary Rule", which would require brokers and others advising on retirement products in the US to act in their clients' best interest, will begin to take effect on 9 June with no further delays, US Labor Secretary Alexander Acosta said on Monday. While we are disappointed in this latest development, we agree with the guiding principles Secretary Acosta outlined: "that Americans should be trusted to make their own decisions about retirement planning advice, products and services they need; that the rule should benefit the investing public, not the plaintiffs' bar; and that the DOL should take full advantage of the SEC's expertise to craft a better rule".

After a almost four month delay, the Trump administration has chose to allow the Department of Labor to move forward with a rule meant to stop investment advisors from pushing customers into products that primarily benefit the advisor.

That the RFI will specifically ask for public comment on "whether an additional delay in the January 1, 2018 applicability date would allow for more effective retirement investor assistance and help avoid needless or excessive expense as firms build systems and compliance structures that may ultimately be unnecessary or mismatched with the Department's final decisions on the issues raised by the Presidential Memorandum".

But Puritz says the political landscape has been shifting over the past year, with major industry groups opposing the rule less vehemently than they did in the past.

Asset managers have also debuted T shares, which charge the same commission - often 2.5% upfront - for all asset classes, as a response to the fiduciary rule.

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"The Labor Department will roll back regulations that harm American workers and families", he said. It takes a year or more for an administrative agency to change this kind of rule, and the Trump administration hasn't had time to do it.

"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".

"This decision will make it harder for many Americans to save for a dignified retirement". It's focused on mitigating conflicts of interests that may arise in financial advisers' investment recommendations for retirement accounts.

Acosta also hopes the SEC "will be a full participant" in drafting a fiduciary rule, which the commission has so far declined to move on. While most of these companies lobbied against the rule initially, they've become more ambivalent about it now that they've done most of the hard work required to comply with it.

SO LONG, BICE?The DOL may be alluding to stripping the best-interest contract exemption, a provision of the rule the industry views as particularly onerous, of its present conditions in place of something "less administratively difficult" if a brokerage uses clean shares with clients, Mr. Humphrey said, qualifying this explanation as an educated guess. "It generally involves large sums and there have been many reports of abuse", financial analysis firm Dalbar said Tuesday. The Labor Department stepped in after progressive activists and politicians rallied around the rule they say helps protect consumers from dishonest financial advisers.

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