WASHINGTON -- A federal rule requiring financial brokers to put retirement savers' interests ahead of their own will take effect June 9 without further delay, Labor Secretary Alexander Acosta said this week.
The regulation, which is known as the fiduciary rule, was pushed back after President Donald Trump signed a memo in February asking the Labor Department to re-evaluate the rule and revise it if it would be harmful to investors. The rule was originally supposed to be implemented April 10.
In an op-ed for the Wall Street Journal that was published Monday night, Acosta said the department "found no principled legal basis" for delaying the rule any further. However, he said the department will work to comply with the president's request and will continue until Jan. 1 to seek public input about the rule and its potential effect on retirement savers.
He said the department is required by law to seek public feedback before making any major changes to regulations.
The fiduciary rule, which was more than six years in the making, aims to set higher standards for the advice that brokers give to retirement savers. The regulation is meant to help cut down on conflicts of interest in retirement advice.
The regulation, proposed by the administration of former President Barack Obama, has faced opposition from Wall Street firms and Republicans from the start.
Supporters of the rule say it could make it more difficult for brokers to recommend investments that could lead to a bigger payout for them, even when there may be better options for their clients. The Labor Department under the Obama administration estimated that such questionable advice is costing retirement savers about $17 billion a year.
However, some financial firms and industry groups say the approach may have the unintended consequence of limiting savers' options if brokers decide to eliminate some investments they fear will face more scrutiny under the rule.
Parts of the regulation will be implemented June 9, but the Labor Department said it will not enforce it until Jan. 1.
Many financial firms have already made adjustments to help them comply with the new standard. Over the past several months, brokerage firms have lowered fees, designed new mutual-fund share classes with simpler fee structures and eliminated some commission-based retirement accounts.
Business on 05/25/2017