BSMG Blog: Protecting the Future of Families and Businesses

Today is the Day - The DOL Ruling

Posted by BSMG on 9 Jun 2017
After playing the waiting game on the highly disputed Department of Labor's (DOL) Fiduciary Rule, the day is finally here...or is it?
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Today is the day, after much anticipation, that the first phase of the Fiduciary Rule goes into effect. However, many of the more impactful elements in the Fiduciary Rule are still on hold, with a further delayed date, of January 2018. Brian Menickella writes in Forbes that, The DOL has said it will not enforce the rule until after January 1, 2018, when the requirements about disclosures and new contracts are set to take effect. This includes regulations of qualified funds, including retirement savings accounts, and the ability of investors to bring about class actions against advisors.

The law, originally set forth to protect the best interests of clients when working with Registered Investment Advisors (RIA's), has expanded on the "investment advice fiduciary" definition to include anyone involved in the financial planning process of a retirement account. This now puts a legal obligation on those individuals to recommend and sell the best solution versus simply a suitable and appropriate investment. What will be the impact? In many cases commission structures. 

Get More: The DOL Fiduciary Rule: 3 Key Issues

Under the Fiduciary Rule advisors who sell based on commissions will be required to provide clients with a signed disclosure agreement called a Best Interest Contract Exemption (BICE) to ensure there isn't a conflict of interest. With the new delay of this requirement, many financial institutions have made the decision to postpone the requirement of the BICE and levelized compensation, giving them more time to crystallize their strategies. Get more on what is covered and what is not in Investopedia's DOL Fiduciary Rule Explained.
What can happen between now and January 1, 2018?  There is some skepticism on if the Fiduciary Rule will fully go into effect, especially now that the House of Representatives and Senate have introduced separate bills calling to stop the regulation and establish a new standard. Just yesterday, the House of Representatives passed the Financial CHOICE Act that includes a provision to kill the Rule.   

So what is going into effect today vs. January 2018?

Partial implementation of the DOL rule begins today.  Read more DOL Fiduciary Rule Not To Be Delayed Further for more detail. 

Get Breaking News on what is happening with the DOL with BSMG!

Topics: Fiduciary, DOL

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