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Implementation of Provision in Fiduciary Rule Is Delayed

On Monday, the Department of Labor finalized an 18-month delay in the implementation of an important enforcement provision in the so-called fiduciary rule, which requires financial advisers who handle retirement savings accounts to put clients' interests first when offering investment advice. The full fiduciary rule was announced by the Obama administration in 2016, and part of it went into effect in June, but the Trump administration has delayed the implementation of the rule's enforcement provisions. Those were scheduled to take effect on January 1st, 2018; they will now not take effect until July of 2019.

Advocates of the fiduciary rule, who view implementation of the full rule as a critically important protection for retirement savers, have warned that the Department of Labor under the Trump administration has no intention of ever fully implementing the rule. "In our view, this is not a delay. It's an effective repeal of the rule," the Consumer Federation of America's Micah Hauptman told Investment News. "This is just a way of stopping the rule to buy them time to kill it, and they haven't justified it on those grounds."

As I wrote last year, in a report on the economic costs of conflicted investment advice, President Barack Obama's Council of Economic Advisers concluded that "conflicted advice costs Americans about $17 billion in foregone retirement earnings each year." Over the summer, the Economic Policy Institute, a progressive think tank, estimated that an 18-month delay in the full implementation of the rule would cost retirement savings $10.9 billion over the next 30 years. The EPI has also previously estimated that earlier delays under the Trump administration will cost savers $7.6 billion over the next 30 years.