Phase One of the Department of Labor’s Fiduciary Rule took effect on June 9, 2017. In short, it requires both advisors and brokers to provide objective advice to their customers. This is a significant change to the standard for brokers — who originally only had to provide advice that was suitable — and was predicated on the belief that brokers, who are usually paid commissions on sales, could give advice that may be in conflict with their desire to earn commissions.
It would appear that Phase Two, dealing with exemptions from the Fiduciary Rule, has been delayed until July 1, 2019, based upon a recent release on the Office of Management and Budget’s website in late August 2017. This delay, if it ultimately goes into effect, may enable the DOL to coordinate with other regulators, such as the Securities and Exchange Commission, FINRA, and others, who are proposing their own fiduciary rules for brokers. Harmonization within the financial industry is of paramount importance for financial professionals, consumers, and their counsel.
As this closely watched issue continues to develop we will update this notice accordingly. If you have any questions regarding this rule or other broker-dealer issues, please contact Kevin S. Koplin.