Are the Fiduciary Rule’s Prospects Really that Dim?

By John Iekel • February 17, 2017 • 0 Comments
The Department of Labor’s (DOL) fiduciary rule appeared on track. Then the November election ushered into office an administration that wasted little time in questioning the rule and has raised the possibility of delay in application, if not outright rescission. But are the rule’s prospects really that dim?

At least one analyst isn’t so sure. In a recent post on RIABiz Today, Janice Kirkel argues that the rule may yet survive — ultimately in spirit, if not in fact.

“What appeared at first rush to be a concerted blitzkrieg of legal, legislative and administrative assaults on the DOL fiduciary rule since the Trump Administration took power is now looking more like a scattershot display of fireworks aimed at creating a distraction in service of some ill-defined end,” writes Kirkel.

Kirkel discusses one of the most recent setbacks for opponents of the rule, the Feb. 8 ruling by Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas in U.S. Chamber of Commerce v. Hugler (N.D. Tex., No. 3:16-cv-1476-M, 2/8/17). Kirkel says that it “was dismissed by some experts as an insubstantial, standalone event” but that it “takes on greater significance when added to a series of other discounted factors — like the failing fortunes of would-be DOL killers and the tick, tick, tick of the clock.”

Rep. Joe Wilson (R-S.C.) on Jan. 6 introduced H.R. 355, the Protecting American Families Retirement Advice Act, a measure that calls for the effective date of the rule, now set to be applicable on April 10, 2017, to be delayed for two years after H.R. 355 is enacted. The bill was referred to two House committees— Education and the Workforce, and Ways and Means.

The committees have not taken action on the bill yet, which Kirkel interprets as another indication that the effort against the bill is languishing. She adds that that “those who might have put forth an alternative bill forward are nowhere to be seen.”

And leaving few stones unturned, the Trump administration on Feb. 9 sent to the Office of Management and Budget (OMB) a proposal to delay the rule’s applicability for 180 days. But Kirkel cites at least one expert, Pension Resource Institute Chief Executive Officer Jason C. Roberts, who cautions that the DOL lacks the authority to unilaterally delay the applicability of the rule, and that time is very short for the DOL to meet the notice and comment requirement regarding such proposals.

But even if one or the other — or all — of the efforts against the rule succeed, Kirkel suggests that it be too late to stop at least the spirit of the rule from taking hold more fully. She asks what’s next; if the fiduciary rule is rescinded, she inquires, “how do you allow salespeople to sell under old rules and call it fiduciary care?”

Accordingly, Kirkel cites a statement by SE2 Senior Vice President of Strategy and Corporate Planning Mary Anne Durall: “While the parties — administration, DOL, legal teams — to the rule continue to discuss delay, most carriers and distributors are making the decision to move forward with compliance.”