Yesterday, the Department of Labor (“DOL”) announced a 60-day extension of the applicability date of the Fiduciary Rule and related exemptions, including the Best Interest Contract Exemption. This announcement impacts ongoing RIA compliance requirements for registered investment advisors.
Under the terms of the extension, investment advisors to retirement investors are considered fiduciaries and have an obligation to give advice that adheres to “impartial conduct standards” beginning on June 9 rather than on April 10, 2017, as originally scheduled. The impartial conduct standards require advisors to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services and refrain from making misleading statements.
During the period between now and January 1, 2018 when all the exemptions’ conditions are scheduled to become fully applicable, the DOL will review the rule and decide whether to make or propose further changes to the Fiduciary Rule or associated exemptions. In the absence of further action by the DOL, the extension announced yesterday does not affect the requirement to enter into a Best Interest Contract or other requirements that are currently scheduled for January 1, 2018.
In sum, the fiduciary definition outlined in the Fiduciary Rule as published on April 8, 2016 and impartial conduct standards are applicable on June 9 while compliance with the remaining conditions in the exemptions, such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors, is not required until January 1, 2018.
Need assistance understanding this rule extension and how it may impact your investment advisory firm’s ongoing RIA compliance requirements? Let Registered Advisor Services help. Contact us today!