In the “Washington Update” panel at the 2017 PLANADVISER National Conference (PANC), Thursday, Thomas Clark Jr., a partner with The Wagner Law Group, informed the audience that “the fiduciary rule is in effect. It became effective in 2016 and was put into practice this past June,” he said, to kick off the discussion.

“What is being delayed, until the end of this year, [is implementing] the complicated exemptions,” he said. “The DOL [Department of Labor] has proposed delaying them an additional 18 months, until 2019. It is processing the comment [letters] and will send [the proposed rule] to the OMB [Office of Management and Budget]. It will then need to publish [the rule] in the Federal Register. Consumer protection groups have threatened to sue if the 18-month delay is put into effect.”

However, noted David Levine, a principal with Groom Law Group, Chartered, “The U.S. Chamber of Commerce might countersue, or the DOL might say that the fiduciary rule wasn’t done properly. It’s kind of like the bills to repeal Obamacare,” in that the efforts to squash the fiduciary rule’s best interest contract exemptions (BICE) have, so far, been for naught. “For those who wish for this to die, you might get it and regret it because the DOL might interpret the old rule in a new way,” Levine said.

In addition, Levine continued, “The SEC [Securities and Exchange Commission] is talking about a combined fiduciary standard for brokers and RIAs [registered investment advisers], although it doesn’t have oversight of ERISA [Employee Retirement Income Security Act]. [DOL] Secretary Acosta said he is talking with the SEC, and the states themselves can take their own actions.”

The bottom line, Levine stressed, is that “even though everyone has ‘fiduciary rule fatigue,’ the rule is not dead.”

Clark added, “The only thing delayed is the exemptions.”

Levine told the audience that, in the interim, advisers will “have to follow impartial conduct standards and document their processes, even though the processes are vague.”

NEXT: Determining whether fees are reasonable

Certainly, Clark said, a big part of these standards for advisers is ensuring that “their own fees are reasonable” and benchmarking them.

Levine conceded that “there is no hard and fast way to determine if your fees are reasonable” but that advisers should not be too concerned about this. “I think this is a litigation loser, a tempest in a teapot,” he said. “DOL is not pushing too hard on this.”

The important thing for advisers to remember, Clark said, is to “have a process to document their fees and meet the impartial conduct standard.” It is also a good practice to charge level fees, he said, rather than fees based on commissions or revenue sharing.

Turning to the rash of lawsuits that have been brought against retirement plans in the past few years, Alison Cooke Mintzer, editor-in-chief of PLANADVISER and moderator of the panel, noted that PLANADVISER.com covered 52 lawsuits in 2016 and that litigators have become so determined to find plaintiffs for class-action lawsuits that they post ads on billboards.

Levine said he does not foresee an end to the increase in lawsuits, primarily due to the fact that “we keep funding them through settlements.” Cases have ranged from accusations of self-dealing and charging unreasonable fees to offering proprietary funds or company stock, he noted.

Clark said the judges in many of these cases view the facts as black and white, and the litigators are now accusing plan sponsors that have acted to improve their plans of not doing enough. “There is a difference between prudence and perfection,” he noted, adding that the most deleterious effect of these cases is they inhibit many plan sponsors from “innovating.”

One case faulted a plan sponsor for offering a stable value fund and not a money market fund, and another case did the exact opposite, Mintzer noted.

“You are damned if you do and damned if you don’t, especially if you have $500 million in assets in the plan or more,” Clark said. “These plans will always be targets. At the end of the day, all sponsors [and their advisers] can do is move forward in the best interest of participants,” ensure that you have processes in place to prove you have done that and document it, he said. If you follow these procedures, Clark maintained, “99.9% of the time you will be all right.”

NEXT: The importance of insurance

To guard against such lawsuits, Levine said, it is important to ensure that plan sponsor clients have insurance, and that the adviser himself has errors and omission (E&O) insurance, particularly because litigants now target advisers because of their “deep pockets.” Levine also predicted that the DOL will “investigate every new ESOP [employee stock ownership plan].”

As far as whether the current administration will pass tax reform, Levine said, “Don’t bank on it. The devil is in the details, and, so far, the White House and Congress have issued “fewer than 10 pages” on reform. Levine also said he doubted the Senate would be able to amass 50 votes to pass tax reform. “It’s health care all over again,” he observed. “Congress is going to continue to be paralyzed. Things aren’t moving.”

Clark said the most likely tax reform the retirement plan industry will see is further acceptance multiple employer plans so that they can combine plans of companies that are not within the same industry, which, he said, would be “fantastic” in terms of expanding retirement plan coverage to midsize and small employers.