The Labor Department is formally proposing to delay the implementation of the so-called fiduciary rule, a key consumer protection championed by President Barack Obama and others.
The rule requires retirement advisors to put their clients' best interest first, but industry groups don't like the regulation and argue that it limits consumers' investment choices. It is supposed to take effect April 10, but the new proposed start date will be June 9.
There is a 15-day comment window on the delay. President Donald Trump signed an executive order in February directing the Labor Department to review the regulation, and a 45-day comment window for that is already underway.
The White House initially sought to use executive authority to postpone by the rule by 180 days but dropped that provision from the final text of the presidential memo. A Texas court recently upheld the regulation, following a challenge from the U.S. Chamber of Commerce and eight other business groups. They are appealing the decision.
"Let's not kid ourselves — this is not going to end with a 60-day delay," said Micah Hauptman, an attorney at the Consumer Federation of America. "The longer the delay in implementation, the more harm that will befall retirement savers."
Tim Pawlenty, chief executive of Financial Services Roundtable, said his bank lobbying group supports advisors working in the best interests of their clients, but that the standard should be crafted by the Securities and Exchange Commission instead of the Department of Labor.
"Such a requirement should be implemented without miles of bureaucratic red tape," Pawlenty said in a statement. "The DOL's rule will lead to fewer retirement savings choices for many Americans, and we are encouraged the DOL is proposing to delay this rule."
Consulting firm A.T. Kearney has estimated the fiduciary rule could cost the industry as much as $20 billion in lost revenue and cause $2 trillion in assets to be shifted.