Spirit if Not the Letter?

By John Iekel • May 05, 2017 • 0 Comments
The Department of Labor’s (DOL) fiduciary rule has been bouncing around official Washington for more than a decade. And despite that span of time, it’s still unclear what the ultimate fate of the rule will be. But that may not matter — the spirit of the rule already may be taking hold, argues a recent analysis.

In The National Law Journal’sDespite Fiduciary Rule's Delay, DOL's Measure Has Spurred Changes,” Victoria Finkle argues that changes already are afoot.

Why? Finkle cites analysts’ argument that the threat of the rule being fully implemented already has changed an industry she describes as in the public eye to a greater extent than it has ever been. She adds that the back and forth over the rule has had a big impact on the industry and that many expect a number of the changes that have taken place to last.

Finkle notes that some analysts argue that the rule ultimately will not see the light of day in its current form, if not suffer outright revocation. Nonetheless, Finkle says, other observers think it may come down to the bottom line and that many firms will adopt tougher standards of their own volition as a business practice and a means to better compete.

Among them: Plan Sponsor Council of America Board Chairman Stephen McCaffrey, who warns that clients’ and participants’ are more aware regarding what they need to ask and look for and that they have a responsibility to look after their own financial interests. Similarly, Proskauer Rose partner Seth Safra told Finkle that he believes that awareness of firms’ compensation arrangements and fee structures is not going to go away regardless of what happens to the rule.

Not only that, firms may find voluntary compliance a way to avoid litigation over fiduciary practices, Finkle suggests, and points out that class action lawsuits already have been set in motion.

There have been many dates that have been pivotal regarding the rule; the latest is June 9, the date on which the rule is now set to be implemented. Maybe. But again, Finkle argues that like the final disposition of the rule, that date is almost irrelevant. Further, she notes that some attorneys are operating under the assumption that the rule will be implemented and are telling clients that they should comply with the rule and that it may not be wise to count on the rule changing or being revoked. And, she observes, the delay notice itself said it would be “inappropriate” to “broadly delay” its implementation.




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