Last month, the U.S. Department of Labor requested an 18-month extension of the fiduciary rule’s transition period. As a result, key changes may be in store for the Best Interest Contract (BIC) exemption and two other exemptions.
The U.S. Department of Labor (DOL) fiduciary rule went into effect on June 9 of this year, with an original transition period set to end January 1, 2018. This period was intended to offer relief to industry professionals from some of the conditions of three exemptions related to the fiduciary rule, including the Best Interest Contract (BIC) exemption.
Since June, financial advisors working with IRAs and plans are considered to be acting as fiduciaries and must satisfy certain impartial conduct standards. During this transition period, however, they are not obligated to provide new disclosures or to enter into best interest contracts with their clients.
On August 31, the DOL published a proposal to extend the fiduciary rule’s transition period by 18 months, to July 1, 2019. This would give the department additional time to consider possible changes and alternatives to the three exemptions.
The proposed extension follows the DOL’s Request for Information (RFI), soliciting input on possible new exemptions or changes to the fiduciary rule.
Taken together, the RFI and the proposed transition extension suggest that there could be material changes to the fiduciary rule before it goes into full effect.
Regardless of the rule’s final outcome, Capital Group is well positioned to adapt our business to the regulatory changes, and to help our advisor clients do the same. Please see our updated FAQ article under “Other Resources” to the right.