IT'S FIDUCIARY DAY - CUE, Inc.
  • IT’S FIDUCIARY DAY

All the information below comes from Politico, which is a paid service CUE subscribes to on behalf of our members.  This morning, they published a great summary of the initial impact of the fiduciary rule in their Morning Shift newsletter which we are sharing here.   

The Obama Labor Department’s fiduciary rule — which requires that broker dealers consider only their client’s best interest (and not commissions or fees) when providing retirement advice — will take partial effect today; the rest takes effect in January. Here’s the breakdown:

What takes effect today:
— The rule’s broadened definition of fiduciary and investment advice.
— Components of the “best interest” contract exemption, which outlines certain conditions under which broker dealers may continue to receive fees and commissions. The provisions that take effect today require that broker dealers provide advice in their client’s best interest; receive compensation that is reasonable; and do not provide misleading information.

What takes effect in January:
— All remaining components of the “best interest” contract exemptions.
— Companies that provide advice to IRA holders will need to sign a contract with their clients declaring that they are acting in the clients’ best interest.

Implementation of the fiduciary rule was never a slam dunk under the new president — and its future still remains a bit murky. In April, the Labor Department delayed the regulation’s effective date in response to a White House a memorandum. Labor Secretary Alexander Acosta eventually decided that there was no legal justification for delaying the rule further, and outlined his reasoning in a May 22 Wall Street Journal op-ed . But Acosta also indicated that he would review the regulation.

Earlier this week, the Labor Department sent a proposed request for information on the rule to the White House Office of Management and Budget. Meanwhile, congressional Republicans haven’t given up their efforts to block the measure. On Thursday lawmakers in the House and Senate introduced legislation to halt the fiduciary rule, and the House passed the CHOICE Act, a repeal of the 2010 Dodd-Frank financial reform bill that also included a provision to repeal the fiduciary rule.