The Department of Labor announced Wednesday that it would consider delaying the implementation of a new fiduciary rule, part of which requires that retirement brokers provide investment advice in their clients’ best interest.
After a 15-day period for public comment period beginning Thursday, the department could choose to extend the implementation of the rule – originally slated to go into affect on April 10 – until June 9.
A Department of Labor press release cited a Feb. 3 executive order from Donald Trump to justify the proposed delay. In it, Trump argued that the new regulation, pursued aggressively by the Obama administration, “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration.”
In the order, Trump also asked the Labor Department to consider whether the rule “is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.”
Former President Barack Obama announced his support for the rule change in a speech to the AARP two years ago.
A fact sheet from the President’s Council of Economic Advisers at the time pointed to conflicts of interest and backdoor payments in the financial advice industry that it said disadvantaged investors.
“A system where Wall Street firms benefit from backdoor payments and hidden fees if they talk responsible Americans into buying bad retirement investments—with high costs and low returns—instead of recommending quality investments isn’t fair,” it read. “These conflicts of interest are costing middle class families and individuals billions of dollars every year.”
Obama later vetoed a congressional effort to block the rule.
Rep. Phil Roe (R-TN), a leading critic of the rule, said at an investment conference at the time: “Obviously this election that’s coming up changes everything. If Trump wins I think there’s a great chance that he can overturn it.”
Trump’s second nominee to lead the Department of Labor, after fast food CEO Andy Puzder dropped out of the confirmation process mid-February, is Alex Acosta, who has yet to be confirmed.
