March 07, 2017 1:20 PM

After proposing last week to extend the implementation deadline of its fiduciary rule by 60 days, the U.S. Department of Labor has opened a 15-day public comment period for its conflict of interest rule

This new round of public commentary on the DOL fiduciary rule evokes an old John Wayne quote: “Tomorrow hopes we have learned something from yesterday.”

Let’s not lose sight of that moving forward.

The reprieve is a chance for the DOL and our legislative branches to consider a next move, one that may surprise all of us. The reprieve also provides much-needed time to catch our breath as a profession and think about what is next.

All comments made on the rule are read by the Department of Labor; comments with rigor and limited bias are likely to be considered more than those with passionate fury. Public comments shaped changes to the fiduciary rule between 2015 and 2016; they can continue to impact the rule as it evolves. You have the opportunity to move a needle.

After reading and studying the rule over the last year, the profession has a deeper understanding of fiduciary duty. Prior to 2015 prudence was vaguely defined in terms of modern portfolio theory and risk/reward tradeoffs. Today, the profession has evolved its understanding of a fiduciary duty. A fiduciary duty demands obedience, loyalty, recordkeeping, good faith and putting client interests first. CFP® professionals, Registered Investment Advisors and Investment Advisory Representatives have found clearer understanding of their client obligations.

Meditating on the Pause: Where are We Now, and Where Can We Go?

Passionate arguments around both sides of this rule mirrored the recent presidential election. Conversations were quick to abandon rational perspectives and devolve into name-calling. My favorite moment in our DOL journey was being called a communist, deep in the heart of Texas, by a man who could have been a body double for John Wayne himself.

The current iteration of the rule expanded a fiduciary lasso to IRAs and other qualified plans, redefined “advice,” and eliminated traditional compensation models. Fees and commissions were only allowed in lassoed account types if financial institutions agreed to follow rules and hold their reps accountable.

What are some outcomes of our current pause? Those hoping for a complete repeal may be found wanting. The largest broker/dealer in the United States moved to a fee-only retirement account model. Mutual funds began manufacturing new lower cost share types. Some insurance companies left the retirement space entirely and new lines of annuity products wait in the wings with more liquidity and lower commissions. AARP, The Financial Planning Association, and CFP Board have loud voices in favor of a fiduciary standard. Complete the chorus with a harmony of registered investment advisors who were already in the fee space ... parts of the rule are likely to survive.

What changes should we expect? The DOL could redefine covered accounts, perhaps limiting the rule to ERISA plans rather than IRAs. Calls to action and prohibited transaction exemptions (PTEs) might be scaled down. New PTEs may be created.

The rule’s heart is noble. Retiree vulnerability is too often exploited. The rule was an attempt to lessen that exploitation, but in doing so would likely exclude low and middle income Americans from receiving quality financial advice

Perhaps the DOL could strike a balance between consumer protections and affordable advice. And your comments could help blaze that trail. Whichever side of the aisle you are on, check your hat before you start typing.

Formal comments can be submitted to the Office of the Federal Register until March 17, 2017. You can submit a formal comment here.

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