The Department of Labor this month might finalize its transition period for the fiduciary rule, extending it to July 2019 as earlier proposed, according to experts at the Drinker Biddle law firm.
“If I were to bet, I think it will happen by the end of the month,” said Brad Campbell, a partner in the firm’s employee benefits and executive compensation practice group.
Among other things, the DOL’s transition period provides temporary relief from the rule’s best-interests contract exemption, which creates a path for use of commissioned products in IRAs. The DOL has proposed extending the transition period from the current end date of January 1, 2018.
An impartial-conduct standard is already in place for advisors who advise on retirement plans or rollovers.
“I think that that [two-year transition] period is essential … for the department to do the work” in making any changes to the final rule in coordination with other agencies, said Campbell, a former DOL official, speaking on a conference call Thursday.
But agency coordination might be a sticking point in getting to a final, harmonized rule since both the SEC and DOL are short of staff.
The SEC is missing two commissioners, and Chairman Jay Clayton will want a full commission to take on the politically difficult task of formulating its own fiduciary rule, said Jim Lundy, a partner in Drinker Biddle’s litigation group.
“The timing will be spring and summer before we see a proposed [fiduciary] rule” from the SEC, Lundy said. “Then we have to see a rulemaking process continue from there.”
Likewise, the DOL is missing key players, including a head of the DOL’s Employee Benefit Security Administration (EBSA) unit, which is responsible for the fiduciary rule.
“In addition, there are a number of appointed positions below [that] assistant secretary level” that have yet to be filled, said Fred Reish, partner in Drinker Biddle’s employee benefits and executive compensation practice group.