Century Law Group, LLP Century Law Group, llp

Timing for brokers' fiduciary rule enforcement materially adjusted

The fiduciary standard applicable to investment advisers/brokers in California and nationally was a hot-button item in 2016. Implementing new rules to expand oversight duties and liabilities for financial professionals was a core objective of the Obama presidency during its final year.

The result: a regulation passed by the U.S. Department of Labor in June last year that brought these two key changes:

  •  An expanded list of advisers deemed fiduciaries and having a closely scrutinized duty to act always in clients' best interests; and
  • Enactment of impartial conduct standards imposing multiple new exactions on brokers

Unsurprisingly, the provision was hailed in some quarters.

Not all, though, and certainly not by participants in the investment industry. In fact, the regulation has been met with persistent criticisms that it imposes an unfair burden on advisers and actually lessens their effectiveness for investors. Moreover, many critics claim that the new rules have confused the general public.

That is the stance firmly taken within the Trump administration, which has been adamantly opposed to the changes ushered in last year.

The current administration's discontent is so strong that it recently suspended a key element of the fiduciary duty regulation pending further DOL review over the next 18 months.

Specifically, officials have postponed enforcement of the rule. They state that additional scrutiny is needed to enhance consumers' understanding of its details. They also say that adjustments will ensure fairness to advisers and better coordination among state and federal regulators.

Financial advisers will welcome the news, given the subject matter's close connection with their livelihood and professional licensing.

The topic of broker oversight and responsibility is clearly complex and, arguably, sometimes muddled and leading to inconsistent results. A financial professional having questions or concerns regarding any aspect of professional responsibility can obtain candid guidance and strong legal representation from an experienced license-defense attorney.

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