Last April the Department of Labor finalized its massive fiduciary conflict of interest rule, restricting severely the ability of financial institutions to compensate employees who are providing advice to retirement plan and individual retirement account participants. It might be an overstatement to say the rule effectively bans brokers and call center operators from providing specific guidance on investments and rollovers, but not by much.
The rule has been incredibly controversial. A significant part of the financial services industry was strongly opposed to it. Indeed, the U.S. Chamber of Commerce, the Financial Services Institute Inc. and other trade associations have a pending lawsuit challenging the validity of the rule under the Employee Retirement Income Security Act, the Administrative Procedure Act and the Constitution.
It was generally understood that the Obama administration wanted to get this rule in place before a new president, new secretary of labor and new head of the Employee Benefits Security Administration take office in 2017. Although it was finalized last April, the new regulation doesn't take effect until April 10 to give the private sector time to revise current systems and business models.