Update on DOL Fiduciary Rule
Two lawsuits aimed at overturning the Department of Labor (DOL) rule that requires financial advisors who provide advice on retirement plans (including IRAs) to act as fiduciaries have met with early defeat. A third lawsuit was heard last month and the judge in that case promised a decision quickly.
To recap, the DOL issued the new rules in April 2016 that require advisors to act solely in their clients’ best interests and financial advisers will comply by April 1, 2017. The howls of protest from opponents to this rule began before the ink was dry on the legislation. Multiple lawsuits have been filed to stop the rule from going into effect and two of the suits have been heard with the DOL winning big in both cases. In District Courts in Washington D.C. and Kansas, the judges found that the DOL rules should stand. The third case was heard in Texas last month and the judge has promised a quick opinion.
These findings don’t prevent appeals, of course. However, in the two cases already decided, the plaintiffs have not said if they will appeal. And, of course, we have no idea if the Trump Presidency will oppose the rule either. In the meantime, financial advisors and their employers are preparing to comply with the new law that will require them to either act as fiduciaries or get their clients to sign an exemption that says the advisor doesn’t have to act in their best interest. Stay tuned.