New Administration, New Rules: “Am I a fiduciary or not?”

By Dana Latham Thrasher, Birmingham, Alabama office of Constangy, Brooks, Smith & Prophete, LLP

As anticipated, and consistent with his stance on reducing government regulation, President Trump signed an executive order late last week directing a review of the retirement plan fiduciary rule (the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010). The fiduciary rule, developed under the Obama Administration, imposes strict requirements on financial advisers. The rule confers fiduciary status on those providing advice regarding retirement plan investments, meaning that the advisers have to work in a manner that is in the best interests of their clients, putting the clients’ interests above their own. President Trump’s action begins the process of undoing or modifying the fiduciary rule.

Last week’s executive order did not directly revoke the rule. Instead, in a separate memorandum to the U.S. Department of Labor, President Trump directed the Secretary of Labor to review the rule to determine whether it might adversely affect access to financial advice and to information regarding retirement. The memorandum requires a legal and economic analysis into the likely impact of the rule. If it is determined that the rule would result in a negative impact or would not be consistent with administrative policy, the DOL is required to issue a proposed rule that would rescind or revise the fiduciary rule. The President’s memorandum provides that the DOL should postpone implementation of the rule – which was to take effect in April – while the review is being conducted. The President indicated that the goal is to empower Americans so that they can make financial decisions.

The DOL’s response to the President’s memorandum – delaying implementation of the fiduciary rule pending further review – is anticipated. However, because the effective date of the fiduciary rule was imminent, steps for compliance had probably been taken in anticipation of advisors’ having fiduciary status.

The debate regarding protection of retirement plan investors versus excessive regulation interfering with consumer choice continues, and the next move in preparing for the future is in the hands of the Department of Labor.

About Constangy, Brooks, Smith & Prophete, LLP

Constangy, Brooks, Smith & Prophete, LLP has counseled employers on labor and employment law matters, exclusively, since 1946. A "Go To" Law Firm in Corporate Counsel and Fortune Magazine, it represents Fortune 500 corporations and small companies across the country. Its attorneys are consistently rated as top lawyers in their practice areas by sources such as Chambers USA, Martindale-Hubbell, and Top One Hundred Labor Attorneys in the United States, and the firm is top-ranked by the U.S. News & World Report/Best Lawyers Best Law Firms survey. More than 140 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Alabama, California, Florida, Georgia, Illinois, Massachusetts, Missouri, New Jersey, North Carolina, South Carolina, Tennessee, Texas, Virginia and Wisconsin. For more information, visit