How a Fiduciary Rule Became a Presidential Issue: QuickTake Q&A

What’s more important to people saving for retirement -- advice that comes without conflicts of interest, or advice they can afford? President Barack Obama came out against conflicts. In April 2016, the U.S. Labor Department issued rules holding people and companies that offer advice on 401(k) and similar retirement plans to what’s known as a fiduciary standard. That means they must commit to giving advice in a client’s best interest and charge reasonable compensation. Wall Street firms challenged the rule, arguing that it may make professional advice too expensive for millions of households. Now, just months before the rule is due to take effect, Obama’s successor is intervening on their side.

President Donald Trump is ordering a delay in its implementation, which was scheduled to begin on April 10. Last year, after congressional Republicans passed a resolution to nullify the rule, Obama vetoed it. A number of Wall Street groups and the U.S. Chamber of Commerce have filed lawsuits to block the rule. They charge that the Labor Department encroached on the U.S. Securities and Exchange Commission’s territory and overstepped boundaries set for it by Congress for regulating broker-dealers.