On Friday, February 3, 2017, the White House issued a memorandum to the Secretary of the Department of Labor ordering an updated economic and legal analysis.
Since the Department of Labor’s (DOL’s) “Conflict of Interest Rule” (the “Rule”) and related prohibited transaction exemptions were finalized in April 2016, many impacted organizations have expressed reservations about the timeline and the volume of complex work required in order to be compliant by April 10, 2017.
Due to concerns that the Rule “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of [the] Administration,”1 President Donald J. Trump issued a memorandum (the “Presidential Memorandum”) directing the DOL to examine the Rule to “determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”
The memorandum does not directly delay or order a delay to the Rule’s applicability date, but it directs the DOL to prepare an “updated economic and legal analysis concerning the likely impact” of the Rule, which shall consider, among other things:
- Whether the anticipated applicability of the Rule “has harmed or is likely to harm investors due to a reduction of Americans’ access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice,”
- Whether the anticipated applicability of the Rule “has resulted in dislocations or disruptions” within the retirement services industry that may adversely affect investors or retirees, and
- 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.”
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