Will the New DOL Fiduciary Rule Survive the New Administration?

Financial reports abound with speculation as to how or even if the new Trump administration will uphold the Department of Labor’s Fiduciary Rule. The DOL Fiduciary rule proposes to extend ERISA legislation to cover rollover and IRA advice to require financial advisors act in their clients’ best interests. Although the rule was created last April, and is already official, it will not be officially enforced by the DOL until April 2017. As President-elect Trump secures his cabinet, analysts are left in flux as to how they will be regulated and what to expect in the coming months.

Some expect the DOL ruling will be swept aside by a Trump appointed Labor Secretary who may seek to delay the implementation of the rule. Indeed, a delay is more probably than a new rule all together as drawing up new legislation would be time consuming. A recent Investment News article brings into question if the new administration would even defend the many lawsuits already challenging the ruling. By simply not supporting the ruling, the courts would be left with the plaintiff’s papers to base decisions on. An option to do nothing to regulate the rule is also a cost effective decision.

Clues as to which direction Trump will take may come from someone vocal on the subject, Trump’s long-time political advisor Anthony Scaramucci. The managing partner of Skybridge Capital, Scaramucci called the rule "the dumbest decision to come out of the U.S. government in the last 50 to 60 years.” Throughout the election, Scaramucci has publicly promised the rule would be repealed.

Additionally, last week Texas Rep Jeb Hensarling, a potential candidate for Treasury Secretary and chair of House Financial Services Committee stated Trump and his administration should abolish the rule. Citing the ruling as making “financial advice costlier and less available for millions of Americans”, Hensarling said the Republican lead congress should “make sure this harmful, bureaucratic rule does not go into effect as planned in just five months."

Whatever the outcome, it may be a while before the issue is resolved. Andy Friedman of The Washington Update notes that it’s unlikely that the Trump administration will address the issue within his first 100 days in office. Friedman notes “if taking action is far down the list of priorities, it is possible the new rule could take effect before repeal procedures are finalized.”