The Department of Labor has again indicated that it may be open to softening the new fiduciary rules. Just before the Independence Day holiday, the DOL released an advance draft of a “Request for Information” (RFI), which seeks public input on two topics:
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(1) the advisability of extending the January 1, 2018 applicable date of certain provisions in the Best Interest Contract Exemption and other exemptions; and
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(2) potential new exemptions or changes/revisions to the fiduciary advice rule and prohibited transaction exemptions.
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One could easily conclude from the aggressive deadlines for comments that the DOL already has a good idea of what it intends to do. With respect to a possible additional delay of the applicability date for various exemption provisions, the DOL is requesting comments within 15 days. It is allowing a more generous, yet still relatively short, period of 30 days for the second category of questions. Those deadlines will be measured from the date the RFI is published in the Federal Register, which is expected to be July 6, 2017.
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What does this mean for plan sponsors? The potential delay does not, in any way, minimize the vast differences between a fiduciary and non-fiduciary. Unfortunately for plan sponsors and your employees, though, any delay in application or softening of the applicable exemptions serves as (i) a win for brokers and advisors who have resisted the new fiduciary standard and exemption provisions, and (ii) less protection for individual investors. We’ll continue to monitor the comments submitted to the DOL and to understand how any possible changes may impact you and your employees.
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