Within hours of the announcement of the Trump victory, retirement plan industry stakeholders started speculating about the potential repeal of the Department of Labor’s (DOL) fiduciary rules. While there are some valid reasons and precedents to support that possibility, it is premature to leap to that conclusion. What is far more likely is that the compliance deadline, which is currently April 10, 2017 for the bulk of the new rules, and January 1, 2018 for the remainder, will likely be postponed.
President-elect Trump will have a number of options available to him to stop the rule, ease its burdens or slow it down. Mr. Trump has been clear about his anti-regulation views and willingness to repeal those that are unduly burdensome on business. While he has been clear about wanting to repeal the Affordable Care Act (Obamacare), little is known about his position on the fiduciary rules. It has been reported that at least one of Mr. Trump’s advisers is in favor of an outright repeal. Interestingly however, other than wanting a delay in the compliance dates, it is not clear yet what retirement plan service providers want to have happen with respect to the entire set of rules. Many have already invested substantial time and resources preparing, including changing their products, business and staffing models.
In the coming weeks and months, the retirement plan community must evaluate the desirability, feasibility and implications of an outright repeal, or partial unwinding of the rules, and make their views knows. Many may determine that they are too far along to completely undo their changes, and potentially have to spend millions of dollars undoing the millions of dollars of work they have already spent preparing to comply. Additionally, service providers may be unwilling to take a position that suggests that they are not in favor of acting in the best interests of their clients, the concept at the core of the rules.
The Bottom Line: It is too soon to tell how a Trump administration and new Congress will handle the new DOL fiduciary rules so retirement plan service providers are well advised to continue to prepare for compliance by April 10, 2017, while at the same time making it known that an extension is needed in order to provide more time to consider what should happen to the rules and to comply with whatever ultimately goes into effect.
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