This past Friday afternoon, February 3rd, the Trump administration released a memorandum instructing the Department of Labor (DOL) to “examine the Fiduciary Duty Rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.” The “Fiduciary Rule” – which expands the definition of “Fiduciary” for financial professional who provide investment advice with regard to IRAs, employer-sponsored retirement plans subject to ERISA, and HSAs – is still scheduled to go into effect on April 10, 2017 unless the regulations are delayed or modified as a result of the DOL’s examination.
Specifically, the memorandum instructs the DOL to consider the following when conducting its examination:
1) Whether the anticipated applicability of the Fiduciary Duty Rule has harmed or is likely to harm investors due to a reduction of Americans’ access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice;
2) Whether the anticipated applicability of the Fiduciary Duty Rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and
3) Whether the Fiduciary Duty Rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.
In response to the memorandum, U.S. Secretary of Labor Ed Hugler issued the following statement : “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”
While the effects of the Fiduciary Rule will be imperceptible to many retirement plan sponsors and participants, some plans will see changes to the investments that are used, fees that are paid to financial professionals who serve the plan, and how investment advice is delivered. We will continue to keep our clients and their plan advisors apprised of this development as we learn more in the days and weeks ahead about the DOL’s examination of the Fiduciary Rule.