The future of the Department of Labor’s Fiduciary Rule is in limbo following a memorandum released last Friday by President Trump. While a draft memo released earlier in the day delayed the implementation date by 180 days, the final memo did not contain such language. Rather, the final version of the memo directs the Department of Labor to re-examine the Rule to determine whether it may adversely affect the manner in which American can receive financial advice.

Specifically, the analysis must consider the following:

  • Whether the Rule has harmed or is likely to harm investors due to a reduction of Americans’ access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice;
  • Whether the Rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and
  • Whether the Rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.

The DOL will now consider its legal options to delay the applicability date as they comply with the president’s memo. It’s unclear how long the re-examination process will take though as the DOL is currently lacking leadership. The Senate hearing for Trump’s nominee for labor secretary, Andrew Puzder, has been delayed four times and has not yet been rescheduled. Puzder, CEO of CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., has not submitted the paperwork required by the Senate committee overseeing his confirmation and some believe he may be having difficulty divesting his assets from privately-held CKE.

The Fiduciary Rule requires financial advisors to act in the best interest of their clients in retirement accounts and was scheduled to be phased in from April 10, 2017 to January 1, 2018. Advocates of the rule say it protects investors from conflicted advice that leads to inappropriate high-fee products, while critics claim it’s too complex and costly and significantly increases the cost of giving and receiving advice. While the Rule will have at least some impact on financial advisors, it is generally expected to have the biggest impact on brokers and insurance agents who accept commissions.

Axia Advisory is and always has been a fiduciary and we applaud the DOL’s efforts to hold financial advisors to a higher standard. Putting client’s interests ahead of our own is a principal upon which Axia was founded. The Presidential Memorandum on Fiduciary Duty Rule can be read in its entirety on the White House’s website.