WASHINGTON — A Labor Department rule that would set higher standards for the advice brokers give to retirement savers will go into effect June 9 without further delay, Labor Secretary Alexander Acosta said Monday.
The regulation, which is known as the fiduciary rule, was pushed back after President Donald Trump signed a memo in February asking the department to re-evaluate the rule. It was originally supposed to be implemented April 10.
In an op-ed for the Wall Street Journal that was published Monday night, Acosta said the department "found no principled legal basis" for delaying the rule further while it seeks feedback from the public about the rule and its potential impact on retirement savers.
"Respect for the rule of law leads us to the conclusion that this date cannot be postponed," Acosta wrote.
The head of the Labor Department added that he will comply with the Administrative Procedures Act, which requires agencies to send out public notices and seek input before they write or change rules. The department will seek feedback until Jan. 1.
The fiduciary rule would require brokers working with retirement savers to put their clients' interests ahead of their own. The regulation, which was more than six years in the making, is meant to help cut down on conflicts of interest in retirement advice.
Supporters of the rule say it could make it more difficult for brokers to recommend investments that could lead to a bigger payout for them, even when there may be another product that could be a better fit for the saver. The Labor Department estimated under the Obama administration that such questionable advice is costing retirement savers about $17 billion a year.
However, some financial firms and industry groups say the approach may have the unintended consequence of limiting savers' options if some brokers decide to eliminate some investments they fear will face more scrutiny under the rule.
Parts of the rule will be implemented June 9. But in guidance published Monday, the Labor Department said it will not enforce the regulation until Jan. 1, 2018.
Many financial firms have made already made adjustments to help them comply with the new standard. Over the past several months, brokerage firms have lowered fees, designed new mutual fund share classes with simpler fee structures and eliminated some commission-based retirement accounts.
The Labor Department said in the written guidance that it is still conducting the review requested by the president. Acosta also hinted that the rule could still face changes down the line. "The Labor Department will roll back regulations that harm American workers and families," he wrote.