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Game On… Maybe

It was widely anticipated that the Department of Labor’s fiduciary rule would be among the fledgling Trump administration’s early action items. And it did not disappoint — or did it?

In “DoL Fiduciary NOT Yet Delayed By President Trump After All…,” a recent “Nerd’s Eye View” blog post, Michael Kitces discusses the action that President Trump did — and didn’t — take on the rule.

“Given the party-lines debate that has revolved around the Department of Labor’s fiduciary rule for the past year — ever since President Obama put the full force and backing of the White House behind the final rule — it was widely believed that once President Trump won the presidential election, it would just be a matter of time before he issued an Executive Order to delay the rollout of the regulation this April,” Kitces writes.

It appeared that “matter of time” ended up meaning only two weeks, as on Feb. 3 an “administrative memorandum” to the DOL was released by the White House.

The memorandum directs the DOL to conduct a new assessment of whether the rule and its applicability date would harm investors by reducing access, bringing about dislocations in the retirement services industry, or causing more litigation and higher costs for consumers to bear. This, Kitces argues, could result in the DOL pursuing the proposed rulemaking process concerning the rule again, including a notice and comment period.

Kitces observes that time is short, since there the applicability date is April 10, and that as a result, “it’s still unclear whether the new economic analysis requirement and subsequent rulemaking process will be able to successfully delay the rule.” And, he adds, the delays and complications surrounding the confirmation of Trump’s nominee for Secretary of Labor further exacerbate the confusion and complexity of delaying the rule’s application.

There is still hope for the rule’s opponents, Kitces thinks, writing that “a delay is still possible” and that he believes that the final order “effectively directs the DoL to try to find some way to do so — whether by inviting a stay in one of the lawsuits, going through a ‘hasty’ rulemaking process to at least get some delay in the applicability date on the table (and then expand into further rule changes thereafter), or getting Congress to intervene (and overcoming a Senate Democrats filibuster).” He also suggests that action is possible after April 10 to address the rule’s long-term provisions.

Nonetheless, Kitces points out, “the fact remains that it’s still ‘game on’ for the Department of Labor’s fiduciary rule” and argues that “it’s looking increasingly likely that the DOL fiduciary rule will be here to stay in some form… the only question is exactly what provisions last in the truly-final version, and when it will truly take full effect!”