by Lisa A. Grimaldi | July 01, 2017
One of the key challenges for the financial/insurance industry -- and, consequently, for those who plan meetings and incentives for such firms -- is keeping abreast of government regulations. High on that list is the U.S. Department of Labor's new fiduciary rule, also known as the conflict of interest rule, which was set in motion last month by the Trump administration and can directly affect how incentives should be administered.

Following is an update on government actions, how financial and insurance firms are rethinking their programs, and expert advice for planners going forward.


Fiduciary rule update
In April 2016, the DOL unveiled the fiduciary rule. The measure, which was championed by President Obama, stipulated that financial advisers, consultants, brokers and agents who sell or offer advice on retirement products -- such as an IRA or a 401(k) -- must be able to prove that they acted in their clients' best interest.

The rule also applies to anyone who receives a fee or other compensation, such as trips or gifts, directly or indirectly, for providing investment advice for retirement accounts, including employer-sponsored retirement programs, IRAs and many Health Savings Accounts.

While it's still unclear how, or even if, the DOL or other body will enforce the rule, the federal agency says the main reason for companies to comply is that it gives individuals the right to sue their adviser if they feel he or she didn't act in their best interest.

Initially, the rule was set to be effective as of January 2018, with a transition period beginning in April of this year. However, all was put on hold when President Trump, just weeks into office, issued a memorandum to delay implementation, and called on the DOL to carry out further economic and legal analyses of the measure's potential impact.

Trump's move led financial industry experts to expect the rule to be weakened or even repealed -- particularly in light of the administration's inclination to lessen federal oversight and regulation of business. At the time, Melissa Van Dyke, president of the Incentive Research Foundation, speculated that "a reduction of regulations might be a welcome measure" for incentive programs.

Yet, many in the industry were caught off-guard in May, when Secretary of Labor Alex Acosta announced a June 9, 2017, start date for enforcement of the rule, including a transition period extending through Jan. 1, 2018.

It's unclear whether more changes will come between now and the January 2018 start date, but for the time being industry sources are proceeding as if the rule and date will hold, and adjusting their incentive programs accordingly.