As the April 10 deadline approaches for implementation of the Department of Labor's fiduciary rule, some members of the defined contribution industry are forging ahead with compliance strategies while others are holding off. Many others are uncertain.
The cause for uncertainty is President Donald Trump's Feb. 3 order to the DOL to review the regulation and propose “rescinding or revising” it if the department determines the rule “has harmed or is likely to harm” investors or is likely to increase litigation and costs to investors and retirees.
However, making a change — even to extend the April 10 deadline — requires a complex process that includes issuing a new proposal, seeking public comment and publishing a final regulation.
Many in the DC industry fear the process could drag on past the deadline.
“It's too early to tell how this will evolve,” said Lew Minsky, president and CEO of the Defined Contribution Institutional Investment Association, referring to the fiduciary rule, also known as the conflict-of-interest rule.
“I expect a fair number of record keepers will move forward with the plans they put in place,” he said. “Many will see it as an opportunity to promote a higher level of service model.”
ERISA attorney Bradford Campbell said the April 10 deadline was “not enough time” for record keepers to meet all responsibilities. The rule was issued last April, providing 12 months for compliance.
“Everyone is going as fast as they can to achieve compliance,” said Mr. Campbell, Washington-based counsel for Drinker, Biddle & Reath LLP and a former head of the Employee Benefits Security Administration.
“Sponsors are waiting to find out from their service providers,” he said. The changes mandated by the fiduciary rule “are not as significant to sponsors.”
Adding to the uncertainty is the fact that Mr. Trump's instruction to the DOL doesn't specify a timetable for regulatory review or a new deadline. “That makes everyone very uncomfortable,” Mr. Campbell said. “There are real-world consequences if this deadline isn't extended.”
Mr. Campbell said he believed record keepers that have announced expansion of their fiduciary advice policies will retain them amid the uncertainty.