NEW YORK (Reuters) - The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.
Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.
Those are just two steps that firms have said they are taking to meet the standards set out by the fiduciary rule, which was originally set to take effect on Jan. 1, 2018.
The Labor Department filed the extension with the Office of Management and Budget as part of a broad review of the regulation requested by President Donald Trump.
The Obama administration crafted the fiduciary rule, which aims to eliminate conflicts of interest in the financial advice Americans receive on their retirement accounts. It requires brokers either to disclose more about how they get paid or move clients out of accounts that charge commissions on each transaction.
Critics on Wall Street have called it overly burdensome and say that the cost of compliance would likely exceed the Labor Department’s $31 billion estimate.
Reporting By Elizabeth Dilts; Editing by Lauren Tara LaCapra and Steve Orlofsky