Notice: This post was migrated from one of our legacy websites and might not display correctly.
The Secretary of Labor, Alexander Acosta, made a court filing on August 9 requesting the Transition Period and Delay of Applicability for the Department of Labor Fiduciary Rule be extended from January 1, 2018 to July 1, 2019.
This court filing included extending the deadlines for the following Prohibited Contract Exemptions:
- Best Interest Contract Exemption (PTE 2016-01): Relief for an adviser to still accept variable commissions
- Class Exemption for Principal Transactions (PTE 2016-02): Relief for an investment adviser or broker-dealer to still engage in a riskless principal or principal transaction
- PTE 84-24: Relief for an adviser to still accept third-party payments for insurance products
Per most recent guidance, firms are still expected to adhere to the Impartial Conduct Standards component of the Rule throughout the Transition Period, meaning:
- Acting in the client’s best interest
- Receiving no more than reasonable compensation
- Making no misleading statements
Given the request for an extension and other open matters concerning the Fiduciary Rule, Ascendant believes that firms will delay making any additional changes to their policies and practices until further guidance is issued.
Note that this delay comes days after a comment letter the Insured Retirement Institute (IRI) submitted in response to the Department of Labor’s request for comment in June. The IRI letter provided data that the fiduciary rule was “causing customers to lose access to valuable retirement products and services,” citing an increased number of advisers ceasing services for accounts with a small balance. Also this week, the DOL published an FAQ on the Transition Period, stating that recommending to an investor that they increase their contributions to retirement accounts does not constitute fiduciary advice, so long as they do not “include recommendations with respect to specific investment products or recommendations with respect to investment management of a particular security or other investment property.”
With the SEC also issuing a Request for Comment in June regarding Standards of Conduct for Investment Advisers and Broker-Dealers, we expect to see continued developments and cross-agency dialogue on this topic in the coming months. We will continue to keep you informed of new developments.
Subscribe to CSS Blog
CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.