April 6, 2016 – The Department of Labor (DOL) issues its final rule to expand the definition of the “investment advice fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA) which will alter the required standard of retirement plan recommendations from financial professionals to clients. This expanded definition makes it legally necessary for all financial professionals who provide retirement advice and/or counsel to meet a fiduciary standard with their clients, meaning they have to provide advice with their client’s best interests in mind.

This new standard will replace the suitability standard which only requires retirement advice to be suitable to the client’s needs, even if there happen to be recommendations are more beneficial to the client.

An Industry Divided

This seems like a no-brainer legislation on the surface since it would seem downright sinister to be opposed to providing people with the best quality retirement advice they’re paying for, but the industry remains somewhat divided on the issue.

The Securities Industry and Financial Markets Association (SIFMA), for example, claims the legislation is “…flawed and is causing harm to retirement savers.” Many financial services firms feel the same way since they fear they’ll be much more exposed to expensive, frivolous lawsuits under the new regulations. They speculate that the potentially excessive cost of dealing with a greater number of lawsuits will get passed on to customers, causing a net negative effect overall.

This regulation will also add to the already massive pile of disclosures that marketers at asset management firms have to include in a majority of their digital campaigns since their communications with advisors will be under a higher level of scrutiny. The copy in financial marketing disclosures already take an almost magical amount of verbal gymnastics to say what they mean in a legal way, so it will be interesting to see how financial wordsmiths get around the new regulations in the event it get’s enforced.

However, many financial professionals, like representatives from financial institutions like Wells Fargo, are unconcerned with the impending legislation and are even using it as a PR opportunity, claiming to have always met a customer-first standard.

April 10, 2017 – is the deadline given by the DOL for financial firms to make the necessary compliance updates to the new standard. Many financial professionals, as well as ERISA attorney Bradford Cambell, still feel 12 months is too small a window to make all of the updates the DOL requires.

Everyone is going as fast as they can to achieve compliance,” said Mr. Campbell, who went on to say that the allotted compliance period was “not enough time” for record keepers to fully comply with the new standard. But regardless, firms are moving all the necessary pieces into place to be in good spot legally when April 10th rolls around.

At least that was the case until things got a bit more interesting…

Donald Trump

February 3, 2017 – President Donald Trump sends an order to the DOL to consider “rescinding or revising” the upcoming regulation if the rule “has harmed or is likely to harm” investors.

What Does This Mean?

In accordance with Trump’s memorandum, the Department of Labor sent a proposal to the Office of Management and Budget in order to delay the rule, giving them more time to review it. The official date of compliance is now expected to be pushed back 180 days (~Septemeber 7th). Many worker protection and consumer groups now fear that this time will be used to take the teeth out of the regulation and render it ineffective.

What are the potential outcomes?

The most likely outcome is unclear at this point but there are a couple likely options to choose from.

1.) The DOL could decide that their regulation, which has been 5 years in the making, was, in fact, the most prudent option for the American people and forge ahead in September without making any changes.

2.) The DOL could take the key safety protections for retirement savings out of the regulation, essentially making it innocuous. In which case, Dennis Kelleher of the Wall Street watchdog group Better Markets, has promised his group will sue the Labor Department citing precedence from three separate court rulings in favor of the rule, including one in a Texas federal court. Based on what the case is built on, this would be a case the DOL is projected to lose, but who knows? Crazier things have happened (see photo above).


Regardless of the outcome, this move by the new administration is bound to have a positive effect since it is calling attention to the fiduciary rule which will cause more retirees to seek out advisors who explicitly comply to the rule. For most of the financial industry, however, this move is just another extension to what they’ve been doing since the rule was proposed: sitting around, waiting to see what happens.

This situation is ongoing so check back into this article for updates as new information becomes available.