New DOL Fiduciary Rule delayed again

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When I was a freshman at Stony Brook University, there was a shooting on campus at a concert where the performer refused to perform after being 5 hours late. No one was shot, but it brought up the question on whether our university police force (Public Safety) should be armed since they weren’t at the time and had to get armed backup from Suffolk County Police. The President of the University, the late John Marburger said he was going to study the issue and decide whether Public Safety should be armed and the campus was divided on the issue. Two years later after so many committees and reports, Marburger made a decision that made no one happy, he made a compromise, where public safety would not be armed at all times, but would have access to their weapons by a lock box. Just like now, people don’t like the politics of compromise.

If you were busy like I was the last week of December (mainly with my kids being homes), you might have missed articles concerning the Department of Labor (DOL) and the proposed fiduciary rule. The DOL, for years, has been trying to expand the definition of plan fiduciary to include stock-brokers and put them almost on the same footing as registered investment advisors (RIAs) who take on that role. At the end of December, the DOL announced that they would hold off on proposing a new rule until August so they could work on it with both sides (those for it and those against it). While we know the stock brokers are against the rule, so many in Congress (who receive many contributions from Wall Street, regardless of political party) are against it too.

Like fee disclosure, I believe a new fiduciary rule will be implemented. The head of the Employee Benefit Security Administration, Phyllis Borzi has been trying at expanding the rule for years and I hate to bet against someone so determined as Ms. Borzi. However, like arming public safety at Stony Brook, both sides will not be happy. You will have a fiduciary rule that will be expanded that neither side will like because while it will add brokers to the rule, it may allow exemptions for commissions and other exemptions that may water down the standards for those brokers who will be added.  While people at both extremes of the political debate fail to to realize is that often any change is as a result of a compromise, it rarely is all or nothing. So you will likely see a new fiduciary rule in 2014, but something neither brokers or RIAs will be so excited about.

Topics:  DOL, Fiduciary Duty, Investment Adviser

Published In: Finance & Banking Updates, Labor & Employment Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

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Ary Rosenbaum
The Rosenbaum Law Firm P.C.

Ary Rosenbaum is an ERISA/ retirement plan attorney for his firm, The Rosenbaum Law Firm P.C.. At a... View Profile »


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