The DOL Spoke (In DOL Speak) 'The Fiduciary Rule Is On, Or Not Exactly'

by: John Lohr

Summary

In the absence of stunning clarity the DOL said the DOL Rule is delayed until June 9, WITHOUT FURTHER DELAY!

Or maybe not, as they examine it and maybe change it significantly by January 1, 2018.

The "ongoing injury" and losses to retirement investors overshadows financial firms' compliance costs.

Today, in a major announcement with its customary clarity of a catfish pond, the DOL made a Fiduciary Rule announcement.

Saying "no, we really mean it this time," the Department of Labor said, "the Fiduciary Rule will now become effective AS IS on June 9 this year." Then it said, "Still we are going to review it in its entirety and by January 2018, we may just decide to rescind the damn thing."

"Now you see it, now you don't. Keep your eye on the pea."

But it could be the DOL (my edits).

Unfortunately, it's NOT April 1.

While saying it's extending the fiduciary rule and related prohibited transaction exemptions for 60 days (to June 9, 2017), the DOL, in the same breath, said it decided that a review of the rule would take longer than the 60-day extension. So the rule will become effective June 9, WITHOUT FURTHER DELAY! (bets available where legal).

It also said, in customary DOL rationale, that it concluded some delay in full implementation of said rule is necessary.

Backing up a bit, the DOL rationalized that to further delay the April 10 implementation date (beyond June) would be chaotic for the firms that have been going forward with fiduciary standards (both of them). No, I'm sure it's more than Morgan Stanley and Merrill Lynch adopting standards. They both, just a few hours before the DOL blockbuster, announced they were going ahead with fiduciary standards on April 10.

Clear now?

Our DOL went further in saying that any more delay would cause "ongoing injury to retirement investors," and that more delay couldn't possibly be justified because those retirement investor losses would "quickly overshadow" and additional compliance cost savings by those other financial firms.

Backpedaling some more, the DOL said this announcement balanced the retirement investors' protection intent with the President's explicit instructions to "look hardly" at those "potential undue burdens." It also admitted something like, "We all agree, but not everybody does."

Then, the DOL said that it will perform the examination of the rule as required by the President in full by January 1, 2018. At that time, it may:

  1. Extend it some more.
  2. Make significant changes.
  3. Make some general changes, or
  4. Scrap the rule (my words).

Finally, the DOL further clarified that compliance with covered transactions other than the fiduciary (best interest) aspect and the prohibited transaction is not required until January 1, 2018.

I'm glad it finally cleared all that up for us. Aren't you?

Oh, Advisor, Broker, Insurance agent: WHAT DO YOU DO?

The answer is: COMPLY.

Just like they said.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: John Lohr provides exclusive research on fiduciary business issues as a Premium author subscription contributorr on Seeking Alpha's Marketplace. Please visit and test it.