DOL Fiduciary Rule enters first stage in Rulemaking Process
The Department of Labor Fiduciary Rule cleared the first step in the process to becoming an official rule when the Office of Management and Budget (OMB), which scores proposals of this nature with financial implications, cleared the proposal for publication. A period of 75 days now follows in which official comments can be submitted, which will then be followed by a public hearing within a month, another comment period, and presumably a final rule.
The DOL has created some new resources to bolster support and understanding of their rule, currently in the proposal stage of the rulemaking process:
- DOL Press Release
- FAQ concerning 'Conflict of Interest Rulemaking'
- Exemption #1:
- Exemption #2:
In a news alert released Wednesday, the National Association for Fixed Annuities (NAFA) said it is “highly anticipated” that the proposed rule will be pushed through at an accelerated pace (see graphic at top right), which would see a published final rule in place midway through Q4 2015.
NAFA is currently in the process of preparing an official response to this latest development. NAIFA, AALU and NAILBA had not yet released new statements as of mid-day Wednesday.
Insured Retirement Institute (IRI) President and CEO Cathy Weatherford released the following statement on April 14: “With the process open to public comment, we will now have the opportunity to continue to advance our discussions and to provide informed and constructive comments that will directly address this lengthy proposal. Doing so will help ensure that the 26 million Americans who regularly rely on financial professionals for help can continue to do so.”
The Financial Services Roundtable also issued a statement Tuesday in reaction to the proposed rule:
“We share the goals of maximizing investor returns, maintaining access for modest income investors to advice, and protecting consumers," said FSR President & CEO Tim Pawlenty. "The Administration's talking points say the proposal accomplishes all this, but we will need to review the proposed rule to see if that is really accurate."
FSR has urged the Administration not to propose any rule that would make professional financial advice more expensive or out of reach for the workers and middle class Americans who need it most.
Under the proposed rule, according to Tuesday’s DOL release, retirement advisers will be required to put their clients' best interests before their own profits. Those who wish to receive payments from companies selling products they recommend and forms of compensation that create conflicts of interest will need to rely on one of several proposed prohibited transaction exemptions.
"This boils down to a very simple concept: if someone is paid to give you retirement investment advice, that person should be working in your best interest," said Secretary of Labor Thomas E. Perez. "As commonsense as this may be, laws to protect consumers and ensure that financial advisers are giving the best advice in a complex market have not kept pace. Our proposed rule would change that. Under the proposed rule, retirement advisers can be paid in various ways, as long as they are willing to put their customers' best interest first."
• To comment about this on Insurance Forums, please visit this new thread: DOL Fiduciary Rule Comment Period Starting
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