A Department of Labor rule that would raise investment advice standards for retirement accounts reached one step closer to being finalized last night. The DOL sent the measure to the Office of Management and Budget, who noted its receipt today on its website. The OMB will have 90 days to review the rule, but it will probably expedite the process.
The OMB looks at all proposed and final rules, particularly examining their economic consequences. If the rule is cleared by the office, the DOL will release the final rule publicly, possibly by March.
The OMB was asked to perform a detailed cost-benefit analysis of the final rule by a major financial industry trade association.
“The OMB has a statutory mandate to get this right,” said Kenneth E. Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association. “To do so, it must fully assess the impact of the DOL’s rule to ensure it serves the best interest of American investors without making saving harder and causing undue harm.”
An advocate of the rule noted that the Labor Department will not be able to please its critics who will persevere in their fight against it.
“The Department of Labor has done a pretty significant job in listening to all the stakeholders over the last five-year period,” said Christine Lazaro, associate professor of clinical legal education at St. John’s University. “To imply they haven’t fully considered the cost benefit analysis of the rule’s impact is misleading.”
Under the proposed rule, the financial industry would have eight months for implementation, a compliance deadline that could stretch into next year.
“The administration probably wants to avoid extending [implementation] much beyond inauguration day,” said Duane Thompson, senior policy analyst at Fi360, a fiduciary duty consulting firm.
The rule, which was created to prevent conflicts of interest for financial advisers working with 401(k) and individual retirement accounts, has been highly controversial and was proposed last April with much support from President Obama.
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