On May 2, 2017, more than 100 Republican lawmakers wrote a letter to the recently installed Labor Secretary Alexander Acosta encouraging the Labor Department to “delay ˗ in its entirety” the Department of Labor’s final rule on the definition of fiduciary (the so-called “fiduciary rule”). This new rule expands the definition of fiduciary under ERISA and the Internal Revenue Code and requires financial advisors to act in the best interest of their clients when offering advice related to retirement accounts. 

The letter follows direction from the White House this February, when President Trump weighed in on the hotly debated topic and issued a Presidential Memorandum directing the Department of Labor to reassess the fiduciary rule and prepare an analysis on the impact the rule will have on the accessibility of retirement information and financial advice. Following this memorandum, the Department of Labor delayed the applicability date of the fiduciary rule, which was originally scheduled for April 10, 2017, by 60 days until June 9, 2017.

In their letter, the Republican lawmakers expressed grave concerns regarding the impact the rule would have on access to retirement advice for small- and medium-sized investors and suggested financial advisers would need to transition from a commission-based to a fee-based business model, in which case they would no longer be able to afford to offer retirement services to these smaller investors. In addition, the lawmakers argue that the constraints of the rule is already having a negative impact on the retirement industry as brokerage firms and insurance companies exit certain lines of business.

Lawmakers from across the aisle generally support the rule as they believe it will protect retirees from receiving conflicted advice.

This space will be interesting to watch over the next 30 days as both parties try to rally support for their respective positions.