DOL Fiduciary Rule Transition Period Extension to 2019 Requested

The Secretary of Labor, Alexander Acosta, made a court filing on August 9 requesting the Transition Period and Delay of Applicability for the Department of Labor Fiduciary Rule be extended from January 1, 2018 to July 1, 2019.

This court filing included extending the deadlines for the following Prohibited Contract Exemptions:

  • Best Interest Contract Exemption (PTE 2016-01): Relief for an adviser to still accept variable commissions
  • Class Exemption for Principal Transactions (PTE 2016-02): Relief for an investment adviser or broker-dealer to still engage in a riskless principal or principal transaction
  • PTE 84-24: Relief for an adviser to still accept third-party payments for insurance products

Per most recent guidance, firms are still expected to adhere to the Impartial Conduct Standards component of the Rule throughout the Transition Period, meaning:

  • Acting in the client’s best interest
  • Receiving no more than reasonable compensation
  • Making no misleading statements

Given the request for an extension and other open matters concerning the Fiduciary Rule, Ascendant believes that firms will delay making any additional changes to their policies and practices until further guidance is issued.

Note that this delay comes days after a comment letter the Insured Retirement Institute (IRI) submitted in response to the Department of Labor’s request for comment in June. The IRI letter provided data that the fiduciary rule was “causing customers to lose access to valuable retirement products and services,” citing an increased number of advisers ceasing services for accounts with a small balance. Also this week, the DOL published an FAQ on the Transition Period, stating that recommending to an investor that they increase their contributions to retirement accounts does not constitute fiduciary advice, so long as they do not “include recommendations with respect to specific investment products or recommendations with respect to investment management of a particular security or other investment property.”

With the SEC also issuing a Request for Comment in June regarding Standards of Conduct for Investment Advisers and Broker-Dealers, we expect to see continued developments and cross-agency dialogue on this topic in the coming months. We will continue to keep you informed of new developments.

Related Content

Latest Content

Insurance Considerations for Investment Advisers

How much coverage is enough? What types of insurance policies do you need? Whether you are starting an investment advisory practice, launching a new line of business, or reevaluating your existing risks, there are critical questions to ask to make sure you understand the various ways to protect your firm. Join us for a practical … Continued

Fifth Circuit Weighs In on DOL Fiduciary Rule

A panel of the U.S. Court of Appeals for the Fifth Circuit has vacated the Department of Labor’s Fiduciary Rule. In a 2-1 split, the Fifth Circuit’s decision overrules a Dallas District Court’s decision, which had previously upheld the rule. Unfortunately, the decision does little to settle the fate of the beleaguered rule. Although it … Continued

SEC Proposes Amending Investment Company Liquidity Disclosures in Forms N-PORT and N-1A

On March 14, 2018, the Securities and Exchange Commission (“SEC”) proposed amendments to the mutual fund liquidity-related disclosure requirements. Specifically, the proposal: Adds a new requirement to “briefly discuss the operation and effectiveness of the Fund’s liquidity risk management program during the most recently completed fiscal year” in the Fund’s Management Discussion of Fund Performance … Continued

Paradigm Shift in SEC Exams, Benefits of a Mock Exam

For investment advisers currently going through an SEC exam, the process likely bears little resemblance to exams of old. Call it the new normal, a paradigm shift, or simply the effects of the SEC having to do more with less, but anecdotal evidence among those now experiencing the exam process suggests some interesting new trends. … Continued

Why Should a Big Hedge Fund Use a Compliance Consultant?

If your firm isn’t already using an outside consultant, you may want to ask yourself “why not?” Oftentimes at hedge funds, compliance officers struggle to successfully fulfill the requirements of the job without an essential tool in their toolbox: the outside compliance consultant. Why? The primary reason is simple: resources. When your head is down … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.