The Department of Labor is proposing to delay a rule that would require financial advisors to act in the best interest of investors.
The regulation applies to individual retirement accounts (IRAs), as well as rollovers out of company-sponsored 401k retirement plans. The new proposal, scheduled to be published in the Federal Register on March 2, calls for a 60-day hold on the original April 10 effective date.
The proposed delay follows a Feb. 3 presidential memorandum from President Donald Trump, who directed the Labor Department to examine the regulation and prepare an economic and legal analysis on the impact of the so-called fiduciary rule.
In its call for the delay, the Labor Depatment says it will provide a 15-day comment period for observers to weigh in. The department will also offer another 45-day comment period for "the broader purpose of examining the final rule and exemptions in response to the president's memorandum."
After the department is done with this examination, it may allow the regulation to proceed, issue another delay, propose to withdraw it altogether, or pitch amendments.
Industry observers don't expect financial services companies to undo efforts already underway to meet the obligations of the investor protection rule. Some companies have adjusted their compensation so that advisors working with retirement accounts are paid a fee based on assets, rather than on commissions.
"The delay is helpful in that some advisors have a little more time to get their I's dotted and T's crossed, but I think most financial institutions are going forward with compliance that's been underway now," said Marcia Wagner, managing director of The Wagner Law Group in Boston.
