The Labor Department's fiduciary proposal is in the final stages of becoming a rule, having been sent last night to the White House's Office of Budget and Management for review, according to the office's website.
The rule is likely to go into effect in the spring of 2016, ensuring that it's in place before President Obama's tenure ends and a new president comes in who can easily undo it, experts and industry observers say.
It's been a long road for the proposal, which would affect advisors and firms providing certain kinds of retirement advice. The Labor Department made its first attempt to craft a rule in 2010, but met with fierce resistance.
The department came back with a new proposal last year, which has met with fierce opposition and steadfast support in equal measure. Critics have charged the DOL rule would be too costly to implement, create a messy patchwork of rules and ultimately leave small investors in the lurch because it would be too costly for firms to serve them.
Fiduciary advocates, however, have welcomed the rule as a necessary tool to protect investors' savings from unscrupulous brokers. And they are hopeful that the rule will not be watered down.
"My expectation is that the key provisions of the rule will remain intact," Barbara Roper, director of investor protection at the Consumer Federation of America, told Financial Planning last week.
Kenneth Bentsen, CEO of SIFMA, one of the industry's largest trade and lobbying groups, called on the OMB to carefully review the costs associated with the proposal, both to firms as well as small investors.
"The OMB has a statutory mandate to get this right. To do so, it must fully assess the economic impact of the DOL’s rule to ensure it serves the best interest of American investors without making saving harder and causing them undue harm," he said in a statement.
Analysts have recently peppered CEOs with questions about how well prepared their firms are for one of the biggest regulatory changes in years. Among those chief executives was Paul Reilly, CEO of Raymond James.
"We've been consistent in that though it is well intended it is not good for clients," Reilly told analysts.
And though he said his firm was looking at various ways to prepare, there were limits to what could be done until the rule details are set in stone.
"We are preparing the best we can, but we are not changing technology or something until we see what the rule says," Reilly said.
Ameriprise CEO Jim Cracchiolo told analysts during an earnings call Thursday that his firm was preparing to make adjustments, particularly around commissions-based business, which is expected to face tighter restrictions under the Labor Department's proposed rule. However, there is a so-called best interest contract exemption, which may allow firms and advisors to conduct commission-based business when providing certain kinds of retirement advice.
"Depending on what they finalize there, that will determine whether a lot of the business that you are doing today can still be done," he said.
While there are still some uncertainties regarding the final rule details, one thing appears to be certain from the viewpoint of chief executives: change is coming.
"If the final rule says you can't do certain business or at certain rates, well then there will have to be adjustments on the part of the advisor and on the part of the firm," Cracchiolo said.