![]() The Labor Department rule would have required financial professionals, including brokers and insurance agents, to adhere to the higher standard when providing advice related to their tax-advantaged retirement accounts, like individual retirement accounts. Generally speaking, brokers must make recommendations that are deemed “suitable,” which is a less stringent requirement than a fiduciary standard. “It seems that even the D.O.L., through its silence, is taking the position that the rule is dead,” said Arthur Laby, a professor at Rutgers Law School and expert in fiduciary law. Nor did it provide any guidance on what rules now apply to retirement accounts. ![]() The Department of Labor declined to comment on Friday. Then, last November, the Labor Department pushed back the full application of the rule by 18 months, to July 2019. The rule’s future was initially called into question shortly after President Trump took office. The industries argued that the rule would make it too costly to work with smaller investors. The rule, drafted over six years by the Labor Department, was strongly challenged by the financial services and insurance industries even as it was being written. “This is a terrible day for retirement savers,” said Micah Hauptman, financial services counsel to the Consumer Federation of America. The department did not try to defend the rule after the appeals court’s initial decision, experts said, and it let a deadline pass to petition the Supreme Court to hear the case. That decision said the Department of Labor, which oversees retirement accounts, overstepped its authority. The court made effective its decision in March voiding the Obama era rule. On Thursday, a federal appeals court dealt a final blow to the rule, legal experts said. Just a year after it took partial effect, the so-called fiduciary rule - a requirement that financial professionals put their customers’ interests ahead of their own with retirement accounts - has effectively died. Investments they recommend must be suitable given your age and risk tolerance, but they don’t have to be the lowest-cost alternative.Retirement investors, you’re back on your own. Securities brokers currently adhere to a less stringent standard, called the suitability rule. The fiduciary standard requires financial professionals to put their clients’ interests above their own. ![]() Years in the making, the fiduciary rule was developed by the DOL to address concerns that some securities brokers encouraged investors to roll their 401(k) plans into IRAs composed of high-cost or inappropriate investments. But no matter what happens in Washington, the financial services industry has made changes that are here to stay. ![]() The order will likely delay the rule’s effective date of April 10 and could lead to its demise. Department of Labor to review the fiduciary rule for brokers who offer financial advice to investors with retirement accounts. IN KEEPING WITH THE TRUMP administration’s deregulatory agenda, the president has issued an executive order directing the U.S. Brokers Change Their Game Plan Kiplinger's Personal Finance | April 2017Įven without a fiduciary rule, many have adopted new pricing models.
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