Labor Secretary Confirmation Could Bring Fiduciary Clarity

Andrew Acosta’s appointment as Secretary of Labor was more or less a non-event from the perspective of the wider media and the general political conversation—but it is an important development for the retirement plan industry. 

By John Manganaro | April 28, 2017
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The U.S. Senate has quietly approved President Trump’s Secretary of Labor nominee, Alexander Acosta, following a previously failed effort by the administration to install fast food executive Andrew Puzder to the position.

Acosta’s appointment was more or less a non-event from the perspective of the wider media and the general political conversation, which seems more focused on tax reform proposals and geopolitical tensions, particularly those involving China, North Korea and Iran. However for the retirement planning marketplace, the appointment represents a significant development.

Acosta, working with whomever is named to fill the role of head of the Employee Benefits Security Administration (EBSA), will oversee the implementation of the Department of Labor (DOL) fiduciary rule reforms championed by the Obama White House. Numerous attorneys, executives and analysts have told PLANSPONSOR they have been very eager to get to this point; without a Labor Secretary in place there has been a lack of clarity from within the DOL as to what the future of the rulemaking might be.

The DOL has signaled it could do another implementation delay prior to June 9, but the more likely course is that the fiduciary rule will in fact be implemented on that date, under Acosta’s watch. Important to note is that, while the fiduciary rule itself has not been changed, the DOL under interim leadership issued several new transition exemptions—most notably a new “best-interest contract transition exemption” and a new “transition 84-24 exemption.” Together, the new transition exemptions will do a lot in terms of easing some of the compliance burden associated with meeting the fiduciary rule requirements—but this is not viewed as a long-term solution by the industry, given these new exemptions only apply during the transition phase during which the rule is to be implemented in stages over several years. 

It remains to be seen exactly what impact Acosta’s appointment will have on the fiduciary rule effort—whether and to what extent he will work to implement Trump campaign promises that bashed the role of regulation in the financial services industry.

NEXT: Positive reactions to Acosta's appointment, but request to delay the DOL rule