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Aon Hewitt Retirement and Investment Blog

The DOL Fiduciary Rule…Journey for Full Implementation is Set to Begin

The new U.S. Department of Labor (DOL) Secretary, Alexander Acosta, has said the new fiduciary rule will take effect June 9, 2017 with no further delay. This decision was made by the new secretary less than two months after the rule was formally delayed, which we described in our April 10, 2017 blog.

This decision was released via an opinion piece Secretary Acosta shared with The Wall Street Journal on Monday May 22, 2017.1 While he admits the rule may not align with Trump's "deregulatory goals," Mr. Acosta said there was no principled legal basis to change the June 9, 2017 date while they seek public input. The rule will go into partial effect on June 9, 2017 and full implementation will go into effect on January 1, 2018. To expand on that, the partial effect means in terms of no-conflict behaviors and fiduciary acknowledgment (where specific recommendations are made to an investor/plan participant to buy, hold, or sell), whereas the full implementation of the new rule (assuming no changes), will require compliance with certain disclosures as of January 1, 2018.

Aon Hewitt Investment Consulting recognizes the potential for another delay for full implementation on January 1, 2018 after the DOL comes back from its economic stability study. This study was ordered by the Office of Management and Budget (OMB) where it labeled the regulation “economically significant” meaning the delay is a big deal to the economy, as reported by Morning Consult on February 28, 2017.2

But until then, the new Fiduciary rule will take partial effect on June 9, 2017 and thus the journey seems to have started to full implementation early next year. We are working with the participant advice service providers to obtain their latest decision on what role they will play with plan participant advice and will report back out to our clients as soon as possible. Please feel free to reach out to your consultant with any questions you may have.

1 https://www.wsj.com/articles/acostas-fiduciary-duty-1495668084
2 https://morningconsult.com/2017/02/28/omb-concludes-review-fiduciary-rule-delay-request/
 
Sara Hakim is a Senior Investment Consultant in Aon Hewitt Investment Consulting (AHIC); leader of Aon Hewitt Investment Consulting’s national Managed Accounts Research Team and is based in Norwalk, CT.  Kevin Vandolder is a Partner in AHIC and leader in the DC practice, based in Austin, TX.

Content prepared for U.S. subscribers, but available to interested subscribers of other regions.


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