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Department of Labor Fiduciary Rule

May 30, 2017

The Department of Labor’s Fiduciary Rule, which was scheduled to become effective on April 10, 2017, has been delayed to June 9, 2017 while the Department reviews the rule and whether or not it adversely affects the ability of investors to gain access to retirement information.  On May 22, 2017 the Department announced that the rule will go into effect on June 9, but with a transition period to full implementation on January 1, 2018.  The Department has announced, however, that it will not pursue enforcement action against fiduciaries who “are working diligently and in good faith” to comply with the rule and its exemptions.

An exception in the rule allows for the investment professional to enter into a Best Interest Contract with the customer, which will allow for the professional to be paid either commissions or third party payments, rather than a percentage of the assets under management.  The Best Interest Contract exception is subject to a number of conditions and caveats, including revising your supervisory procedures, summarizing your procedures on your website, and, of course entering into an agreement with your customer. 

If you want to be prepared to use the Best Interest Contract exception, please contact us.