The Department of Labor (DOL) sent the final rule to the Office of Management and Budget that will delay the implementation of the fiduciary rule. While some brokers may think it’s a time to celebrate, there is no room to celebrate.
Brokers maybe able to continue to operate in the retirement plan space without being a fiduciary for the time being, but what about the cost they had to make in order to comply with the new rule, that’s now being delayed. All those letters sent to certain retirement plan and IRA clients that they can no longer service those accounts can’t be recalled and all the legal cost they paid to comply with the rule can’t be refunded.
It’s hard to close the barn doors after the horses have left and it’s going to be hard for brokers to return to the same business after the fiduciary rule has been delayed. More and more plan sponsors understand what a fiduciary is and that most brokers aren’t fiduciaries.
Just because the rule has been delayed for now, doesn’t mean that there wont be a fiduciary rule down the road that will end up being more restrictive than the best interest contract exemption of the new rule. Donald Trump won’t be President forever and Congress wont be in Republican hands forever either. Midterm elections are 19 months away. Who knows what tomorrow will be?
So in my mind, no time to celebrate.