In the article, “Department of Labor Regulation for Retirement Plans Is Now in Limbo,” The Wall Street Journal reports that delays in finalizing the Department of Labor’s (DOL) proposed fiduciary rule governing advice in retirement accounts make it vulnerable to being scrapped under the Biden administration. The publication turned to benefits and executive compensation partner Fred Reish for his insight on the DOL’s proposed rule.
The Journal explains that the DOL’s proposal would cause rollovers to be more heavily regulated by requiring brokers and advisers to act in the best interest of clients when recommending rollovers when advisers provide ongoing advice about any of the clients’ retirement assets, rather than just advice for 401(k) plans.
The proposed rule “was a big step that caught the industry off guard,” said Reish. He added, “the conditions are so demanding they got a lot of opposition from broker-dealers and insurers. I think that’s why it hasn’t been finalized by now.”
Reish noted that the stricter interpretation — that advisers must act in the best interest of participants when making rollover recommendations — might stand even if the Labor Department’s proposed rule dies.
If the Biden administration does scrap the proposed rule, Reish explained that he expects the Department of Labor to create a more demanding rule than the proposal. “I think somewhere less demanding than the Obamaera rule and more demanding than the Trump approach will probably be their focus,” Reish said.