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Message from the CEO: The DOL Will NOT Extend the Fiduciary Rule Delay

In a Wall Street Journal OpEd released last night, Labor Department Secretary Alexander Acosta addressed the controversial DOL Fiduciary Rule to be applied to the placement of Qualified funds by stating, “We have carefully considered the record in this case, and the requirements of the Administrative Procedures Act, and have found no principled legal basis to change the June 9th date while we seek input.” However Secretary Acosta stated that the DOL will undertake new rulemaking to revise the current rule prior to full implementation on January 1, 2018.

We look forward to any adjustments the Secretary and the DOL may implement, but that does not change the fact that on June 10th the expansion of the definition of who is a Fiduciary and the Best Interest Contract Exemption (BIC-E) and Prohibited Transaction Exemption 84-24 (PTE 84-24) as currently written will be applied during a transition period to expire on December 31, 2017. A BIC-E will typically be utilized by Financial Institutions and is not available to non-registered persons. Producers who are not directly affiliated with a Financial Institution will be able to utilize PTE 84-24 and will individually be acting as a Fiduciary by way of the Implementation of the Impartial Conducts Standards. They are as follows:

  • Provide advice in the retirement investor’s best interest which is both prudent and loyal
  • Charge (be paid) no more than reasonable compensation, and
  • Avoid misleading statements

Further, the Labor Department posted a Field Assistance Bulletin last night instituting a temporary enforcement policy. In summary, the Department will not pursue claims against fiduciaries who are “working diligently and in good faith to comply with the fiduciary rule and exemptions…” The full bulletin can be found here.

The Department also updated and posted an FAQ section on the EBSA website discussing the transition period. The FAQs can be found here.

There appear to be 3 major takeaways at this point: 1) The Department is continuing to seek comments on the Rule and may implement more guidance and/or changes prior to the January 1, 2018 date when full compliance with the rule is scheduled to begin; 2) The industry is receiving “breathing room” in terms of compliance, and good faith efforts to adjust will be received warmly even if mistakes and oversights occur; and 3) Impartial Conduct Standards are here to stay in one form or fashion when dealing with qualified plans and IRAs.

Zenith Marketing is fully committed to you and your clients and will continue to work directly with you under the provisions available to continue your ability – and ours – to do business as together we continue to adapt to the Department of Labor’s Fiduciary Rules.

About Mike Gorlick

President & CEO, Zenith Marketing Group, Inc.

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