Experts Predict Quick OMB Review of Final DOL Fiduciary Rule

What You Need to Know

Evaluations typically take 90 days, but this assessment may be as quick as 30, according to an ERISA attorney.
The standard could be released for publication by Labor near the end of May, a Groom Law principal says.

Now that the Labor Department’s final fiduciary rule has landed at the Office of Management and Budget for review, industry officials and attorneys anticipate that Labor’s final rule doesn’t include many changes and that there will be a quick review by OMB.

Labor filed its final rule at OMB on Friday.

While OMB reviews typically take up to 90 days, ERISA attorney Fred Reish, partner at Faegre Drinker, told ThinkAdvisor on Monday in an email that he suspects that OMB will release Labor’s final rule in 45 to 60 days.

“But considering how fast the DOL finalized the rules, it could be faster, maybe in the 30- to 45-day range,” Reish said.

While Reish believes that the final rules “will be substantially the same as the proposals,” there’s “a chance that there could be some expansion or explanation of when information and education will not be fiduciary advice.”

That could include, for example, “touting services and products, information about retirement adequacy and contributions,” Reish explained. “The industry is hopeful for a more limited definition of the actions that could cause loss of eligibility to use the exemptions.”

The revised fiduciary rule proposal, dubbed the Retirement Security Rule: Definition of an Investment Advice Fiduciary, will likely be finalized this year, with a Jan. 1 effective date, Reish and Brad Campbell, partner at Faegre Drinker in Washington, have said.

Phyllis Borzi, a former head of Labor’s Employee Benefits Security Administration, said in another Monday email to ThinkAdvisor that “DOL got this [rule] ready for OMB review a bit faster than most thought, but that shouldn’t be so surprising given that it is a high Administration priority.”

Added Borzi: “I expect that DOL has continued the open consultative process that we used in developing the 2016 proposal — including outreach and consultation with the staff of the SEC and Treasury/IRS — so that the review process could move smoothly with finalization of the rule possible well before the usual 90-day review period.”

Thomas Roberts, principal at Groom Law Group in Washington, said in another email that Groom is not “anticipating that the DOL’s final rule will reflect major changes from the proposal.”

It is possible, however, “that DOL may tweak certain provisions to address some of the industry’s expressions of concern over the sweeping nature of the proposal,” Roberts continued. “In particular, changes that would provide clearer pathways for wholesalers and those who serve larger plans to avoid fiduciary status when engaged in sales activity would be welcome.”

OMB review “typically marks the final stage of the rulemaking process,” Roberts added, with the timetable for review could be “as short as a few days” or “several months.”

Assuming a typical OMB review process, “we would expect the Fiduciary Rule to be released for publication sometime around the end of May,” Roberts opined.

Duane Thompson, president of Potomac Strategies, stated in another email that he doesn’t foresee “many changes to the final Retirement Security Rule and related amendments.”

“I’m not overly surprised that it’s at OMB now,” Thompson relayed. “I think the Biden administration would want the final package out and approved by late May or early June in order to avoid opponents using the Congressional Review Act to overturn it in the next Congress.”