First Hints of Potential New DOL Fiduciary Rule Emerge

The U.S. Department of Labor (DOL) has filed for review a draft regulation titled “Improving Investment Advice for Workers & Retirees Exemption” with the Office of Management and Budget (OMB).

The actual language of the proposed rule is not yet available, as it must first be analyzed by OMB, but sources are speculating that this proposal likely represents the DOL’s new fiduciary rule, and that the “exemption” referenced in the title of the rule will be related to the Regulation Best Interest package currently being implemented by the U.S. Securities and Exchange Commission (SEC).

Whatever the substance of the rulemaking turns out to be, the timeline for finalizing any new federal regulations under the current presidential administration is already growing tight. On January 21, 2021, either President Donald Trump will be sworn in for a second term (in which case, the deadlines being contemplated here will be of lesser importance) or someone else will be sworn in as the 46th president.

Typically, one of the first actions an incoming president takes is to announce that any regulations that are not already in effect are being put on hold while the incoming administration reviews whether they are consistent with their agenda. “Effective” is not the same as “published in the Federal Register.” In reality, it means “actually being applied.” The upshot is that any new regulation would need to be fully effective by January 20, 2021.

Also notable is that an entirely separate rulemaking proposal, “Financial Factors in Selecting Plan Investments,” was sent to OMB on May 29.  This is a new regulatory item, and is likely an ESG proposal in response to the President’s April 2019 Executive Order on Promoting Energy Infrastructure and Economic Growth.