The Department of Labor (DOL)’s fiduciary rule, now in effect, is still likely not the final rule.

That’s according to Timothy D. Hauser, deputy assistant secretary for Program Operations of the DOL’s Employee Benefits Security Administration (EBSA), who spoke to attendees of the 2017 PLANSPONSOR National Conference.

Hauser noted that the EBSA is working on many initiatives, but chose to spend his time speaking about the DOL rule because “that’s what everyone cares about.” The rule went into effect at the stroke of midnight the night of June 9. Hauser said that was intentionally to give advisers, broker-dealers and other providers the weekend to make sure system changes were operable.

In the version of the rule now in effect, Hauser said, exemptions will be applicable—the best interest contract exemption (BICE) and the prohibited transaction exemption (PTE). The only additional requirements is prudence and loyalty, which means not charging unreasonable compensation and not being misleading in communications.

Hauser said the DOL embarked on this initiative because it felt it needed to revisit the 1975 rule in view of market changes. “The five-part test in that rule meant many fewer people were fiduciaries than the statute suggested, so we went back to a more broad definition,” he told attendees.

In 1975, the retirement industry was dominated by defined benefit (DB) plans managed by professional investment managers. Now, it is dominated by a defined contribution (DC) system managed by individuals. “There has been a move away from advice from professional money managers to advice to individual consumers who do not have expertise,” Hauser pointed out.

In addition, he said, the marketplace for advice is very conflicted. “There are many conflicts of interest, and the DOL was concerned that conflicts were affecting investment advice people receive,” Hauser said. “The previous administration thought there was market failure and people were losing billions.”

The final rule was supposed to go into effect in April. But in February, Trump issued a memorandum asking the DOL to take a hard look at whether the rule could have an impact on people’s access to advice or certain financial products, whether it could disrupt the market, and whether the regulation would cost consumers to their detriment.

In response, the DOL extended the applicability date and asked for additional input. Hauser said the EBSA has gone through those comments, and is looking at an impact analysis. The extension delays most exemptions except for impartial conduct standards (not charging unreasonable compensation and not being misleading in communications.). “We felt enough time had gone by that people should be able to comply with those standards and those would take care of most concerns,” he said.

“The way the exemptions are structured, service providers can sell or make recommendations on a commission or fee basis. The rule is agnostic about the way they are compensated. They can sell annuities and can sell mutual funds and receive front end load and commissions, but will be subject to impartial conduct standards,” he added.

Hauser told attendees the DOL put aside other provisions of its rule until after its analysis. He said there may be changes after the analysis. The effective date of most conditions are moved back to January 2018, and it’s possible the DOL will move other provisions to later than that, particularly if it decides to issue another streamlined exemption or alter terms of current exemptions so providers don’t have to engage in new system builds, if it decides there are better approaches.

Hauser said the EBSA has also sent a Request for Information on Fiduciary Rule and Prohibited Transaction Exemptions for Office of Management and Budget (OMB) approval. “This reflects the fact that we want to move forward on two tracks; at the same time we are doing an analysis of issues brought up by Trump and new points of view people expressed, we are thinking about other possible exemptions that may be more streamlined and build upon changes we’ve seen in marketplace that came from impact of this rule—developments in new share classes, development of tools to help people make rollover decisions,” he told attendees.

Hauser noted the biggest issue, and what seems to be the biggest source of controversy, is the best interest contract requirement. The contract tells individuals that the adviser or provider is a fiduciary and offers a warranty. “One thing in the request for information is a set of questions asking people what effective substitute would be for contractual rights,” he said.

“Obviously, the availability of a contract can incent litigation, but it also incents fiduciary behavior,” Hauser added. “We realize it is a major rule. The expectation is we’ll be working with firms and people trying to comply in good faith to help them; we’re not looking to litigating them.”

Much of the media coverage of the DOL fiduciary rule focuses on what it means for adviser, broker-dealers and providers, but there is also an effect on plan sponsors.

The most important thing for plan sponsors, according to Hauser, is to check contracts to make sure service providers are acting in a fiduciary capacity and make a conscious decision in that regard. Especially for large plan sponsors, the rule lets them decide if they want certain communications to be fiduciary advice.

If advice given to plan participants is for a fee, it is fiduciary advice. But, plan sponsors don’t have to worry about their own employees giving advice if their jobs don’t include that; their own employees are not treated as fiduciaries if answering participant questions.

However, if the recordkeeper is getting compensated and making investment recommendations, it is a fiduciary

Interpretive advice plan sponsors have been using to avoid crossing the line between education and advice appears mostly in the new rule, which also added new language, Hauser said. For example, it is not fiduciary advice to tell people to add more savings—e.g., a good rule of thumb is to save this much, or they shouldn’t leave match money on the table

There is also new language about education about investments. The DOL is looking at more ways to communicate the difference between advice and education.

“I can’t say what is coming going forward, but we do have the authority to make rules that apply to all types of money going into retirement plans,” Hauser said. He added that even if the Securities and Exchange Commission offers some differing advice standards, there may be different consequences, but there are lots of ways to converge the SEC and DOL provisions.