Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. This week’s recap focuses on the latest Department of Labor (“DOL”) fiduciary rule delay and the Financial Choice Act of 2017. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of April 22, 2017:
- Interesting Angles on the DOL’s Fiduciary Rule #44 (Author- Fred Reish, FredReish.com)
Fred Reish, also one of our top 5 DOL fiduciary rule experts to follow, published his 44th article about observations on the DOL fiduciary rule. This particular article focuses on the requirement to comply with the Impartial Conduct Standards as of June 9, 2017. Reish also introduces the concept of the “transition Best Interest Contract Exemption” and highlights some potential problem areas for RIA firms that will be providing investment recommendations in regards to IRA rollover and other impacted scenarios. In particular, Reish raises the need to document, to consider costs of investments, and to evaluate the quality of recommended mutual funds.
- June 9th: Strict Fiduciary Obligations to Arise? (Author- Ron Rhoades, Scholarly Financial Planner)
In regards to the recent delay of the DOL Fiduciary Rule applicability dates, Ron Rhoades, writes that, “most importantly, the DOL stated that the new ‘definition of fiduciary’ rule would go into effect, along with the Impartial Conduct Standards, on June 9, 2017.” Rhoades also notes that, “for “level-fee fiduciaries” the Impartial Conduct Standards only appear to apply during the IRA rollover process, but not thereafter.” In addition, Rhoades also discusses the likelihood of the June 9, 2017 applicability date being further delayed and discusses the details of the Administrative Procedures Act which make it more difficult to further delay the rule. Ultimately, Rhoades concludes somewhat excitedly that, “I’ve been saying, ever since Trump was elected President, that the DOL Rule was likely dead. Yet, here we are in mid-April, and its core provisions remain eight weeks away from becoming effective.”
- On Fiduciary Rule, Trump Could Actually Add More Exemptions (Author- Andrew Welsch, Financial Planning)
“To effectively undo the fiduciary rule, the Trump administration may have to take an alternative path to wholesale rescinding the controversial regulation,” writes Andrew Welsch, Senior Reporter for Financial Planning. Due to President Donald Trump requesting a review of the regulation, the DOL has already delayed the applicability dates of the fiduciary rule’s various components to June 9, 2017 or January 1, 2018. In order to overturn the rule, Welsch writes that the DOL “would have to issue a new economic analysis.” Aron Szapiro, director of public policy research at Morningstar, claims “the argument has now shifted to what will the enforcement mechanism going to look like. That could be adjusted through the creation of new exemptions or carve outs.”
- The SEC Can Reassert Fiduciary Role Under Trump, Says Acting Chair (Author- Ted Knutson, Financial Advisor)
Ted Knutson of Financial Advisor Magazine discusses Michael Piwowar’s speech to the Mutual Fund Directors Forum Policy Conference that took place in Washington, D.C. Piwowar is the acting chairman of the Securities and Exchange Commission (“SEC”). He revealed, “the onset of the Trump administration has given the SEC the opportunity to reassert its authority in determining what the fiduciary standard of care should be for broker-dealers and RIAs when working with clients.” Knutson also writes that Piwowar believes the DOL fiduciary rule is not designed to protect investors but rather “aims to improve the ability of plaintiff lawyers to bring cases.”
- House Dems Blast Financial Choice Act, Call for Another Hearing (Author- Melanie Waddell, ThinkAdvisor)
Jeb Hensarling, House Financial Services Committee Chairman, revealed his Financial Choice Act of 2017 on Wednesday. The hearing to examine the Choice Act, which according to Hensarling is “a better way” than the Dodd-Frank Act, went on for three hours. Democratic members were hoping there would be more than one hearing to discuss the bill. Melanie Waddell writes that, “all Democratic members of the committee sent a letter to Hensarling the same day requesting an additional hearing on the legislation.” In this article, Waddell further details exactly the Choice Act entails and more details on the hearing that took place.
Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!