DOL Extends the Advice Fiduciary Rule’s Transition Period

September 5, 2017

In order to review and possibly revise the advice fiduciary rule, the Department of Labor (DOL) has proposed extending the existing transition period under the rule’s exemptions until July 1, 2019. This transitional relief permits financial institutions that are fiduciaries under the new advice fiduciary rule to engage in transactions that would be otherwise prohibited, provided that they adhere to the rule’s “Impartial Conduct Standards”. This proposal does not affect the application of the advice fiduciary rule to financial institutions that have structured their businesses to avoid becoming fiduciaries; e.g., private fund managers that have chosen to reject investments into their private funds by IRAs and small plans that are not advised by independent fiduciaries with financial expertise. For private fund managers that are relying on the BIC exemption, the proposal does not add any new requirements.

It has not been resolved whether the DOL’s temporary enforcement policy covering the initial transition period, which ends on January 1, 2018, also will be extended. Under the temporary enforcement policy, DOL will not pursue claims against investment advice fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary rule and exemptions. The DOL has solicited comments on whether to extend this policy for the period covered by the proposed extension of the transition period.

Seward & Kissel will continue to monitor the fiduciary rule and alert you to any changes that occur.

For our previous updates and guidance on the DOL’s fiduciary rule, please refer to the following:

Q&As – Now That the DOL’s Fiduciary Rule is Applicable
The DOL Fiduciary Rule – Action Steps for Investment Managers
The New Fiduciary Rule’s Effect on Investment Managers


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