The Department of Labor has pushed back an investor protection rule that requires financial advisors to work in the best interests of clients when handling retirement savings, CNBC reports.
The rule, known as the “fiduciary rule,” was slated to take effect on April 10, but has delayed until June 9, said the Department of Labor.
The move comes after President Trump directed the Department of Labor to review the rule in a presidential memorandum. Trump called on the department to prepare an updated legal and economic analysis of the rule.
Even with the delay, legal experts say the core of the legislation still remains in effect. Financial advisors are still required to charge reasonable compensation, act in investors’ best interests when making investment recommendations, and avoid misleading statements.
Consumer advocates say that while some provisions of the rule remain in effect, the delay isn’t good news for investors.
The Department of Labor said other portions of the rule concerning written disclosures will not go into effect until January 1, 2018.
Since the Labor Department proposed the delay and asked for public comments, the department has received more than 178,000 letters supporting the regulation. Only 15,000 letters opposed the rule.
The delay gives financial companies two more months to prepare for the first portion of the regulation. Financial companies have argued that the regulations are costly and unduly burdensome to implement. Those opposed to the regulation say it will also limit the investmnet options for the middle class.
While some key provisions will go into effect in June, others will be reviewed by the Labor Department. The department said it would reviewing the economic impact of the requirement of certain aspects of the regulation.
The Labor Department said it will use its findings to potentially revise or rescind “some or all” of the provisions of the rule, including those slated to go into effect in June.
Organizations that represent the financial services industry applauded the regulation’s delay. They argue that even more time is needed to comply with the rule.
The Investment Company Institute said in a written statement: “ICI welcomes the Department of Labor’s delay of original implementation date of the agency’s fiduciary rule until June 9. But additional time is critically needed.”
Experts say they expect further delays and for the regulation to be revised. Until then, consumers are on their own. Americans are encouraged to ask their financial advisors if they are a fiduciary and obligated to act in their best interest.