With about another week to go, the Labor Department has gotten a number of comments on its proposal to delay the fiduciary regulation’s April 10 applicability date – but perhaps not the kinds of comments one might expect.
As of this writing, approximately 215 comment letters have been posted on the Employee Benefit Security Administration’s website, in response to the DOL’s request for comments on the proposed delay of the applicability date for the final fiduciary rule and related ERISA prohibited transaction exemptions.
Most of the comments appear to be individual submissions – both retail investors and some advisors (most of whom appeared to be in favor of repeal, not merely delay).
A few were submitted by “anonymous,” including one who commented simply: “Please, just no.”
Online advice and managed account provider Financial Engines submitted a five-page comment letter that was supportive of both the regulation and the need to move ahead. “Although we recognize that some in the industry may desire additional time to comply, Financial Engines is proud to be in full compliance and we are encouraged that many others have announced their intention to be in compliance by the original applicability date.”
No surprisingly, robo-advisor Betterment also supported moving ahead per the original schedule, noting that they believed “any delay would needlessly perpetuate conflicted advice at investors’ expense.” They go on to explain that, “A delay would be bad enough, but it would be even worse if the delay is used as an opportunity to dilute the rule or remove it altogether. We are extremely concerned about this possibility.”
Adviser Robert W. Baird & Co. favored a delay “to ensure our clients understand and are prepared for the significant and unexpected changes they will experience as a result of the rule.” The letter goes on to note that, “Because of the uncertainty regarding this rule, and the President’s Memorandum, we have not advised clients of the ways in which the rule will affect the products and services available to them, and have suspended any further activity in response to the rule.” The letter also expressed a belief that the “current cost analysis the Department is relying upon is significantly flawed, outdated, and based on incorrect assumptions that are inconsistent with the practices that will be permitted by the exemptions.”
Stifel Financial Corp. cited President Trump’s Memorandum (“Clearly, a 60-day delay, at a minimum, is necessary to appropriately respond to the President’s Memorandum”), the Labor Department’s own proposed request for a delay (“The Department believes it may take more time than that to complete the examination mandated by the President’s Memorandum”) and the timeline itself (“a delay is required when the comment period addressing the specific concerns of the President’s Memorandum ends seven days after the applicability date of the Fiduciary Duty Rule”).