DOL Likely to Delay Parts of Fiduciary Rule

Last week, the Department of Labor (DOL) sent a request to the Office of Budget and Management to allow the DOL to issue a notice for public comment to delay full implementation of the fiduciary rule.

The fiduciary rule was finalized in 2016, but implementation was delayed until June 9 of this year, when the rule took partial effect. The rule is currently scheduled to take full effect on Jan. 1, 2018. However, the DOL’s recent request suggests it does not want the rule to take full effect before at least July 1, 2018.

The fiduciary rule is a complex federal regulation that tightens conflict of interest rules under the Employee Retirement Income Security Act and requires insurance agents and brokers who give guidance about certain retirement investments, including some annuities and health savings accounts, to adhere to a fiduciary standard of care.

Although the rule may see additional delays and changes as the Trump Administration reviews it, as of June 9, “impartial conduct standards” are in effect for insurance agents and brokers who sell and service products impacted by the rule. The standards specifically require advisers and financial institutions to:

• Give advice that is in the “best interest” of the retirement investor.
• Charge no more than reasonable compensation.
• Make no misleading statements about investment transactions, compensation and conflicts of interest.

The DOL issued an FAQ document and a temporary enforcement policy on its website to assist advisers with understanding the requirements that currently apply.

Meanwhile, the rule is negatively impacting independent agents. Last month, the Big “I” surveyed members in 25 states and found that almost half of respondents who sold impacted products have exited or plan to exit the market as a direct result of the rule.

The association conveyed this information to the DOL and asked it to amend and clarify the rule to limit its negative impacts on independent insurance agents and their clients. The Big “I” will continue to keep members updated on potential delays and changes to the rule and expects additional information from the DOL in September or October.

Jennifer Webb is Big “I” federal government affairs counsel.