Compliance

PANC 2017: Washington Update

Wagner Law Group attorney underscores: The fiduciary rule is in effect.

By Lee Barney editors@strategic-i.com | October 18, 2017
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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.”

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