The fiduciary rule has remained a source of regulatory uncertainty for financial professionals, with recent developments adding further complexity. In a significant turn, the Trump administration has requested a pause in ongoing appeals related to the Department of Labor’s (DOL) fiduciary rule, further complicating the landscape for wealth and asset managers seeking clarity on compliance requirements.

A Regulatory Rollercoaster

For years, financial professionals have been navigating the ebb and flow of the fiduciary rule’s enforcement. First introduced under the Obama administration to enhance the standard of care for retirement advice, the rule was met with resistance and underwent multiple revisions under subsequent administrations. The Biden administration’s iteration of the rule—the Retirement Security Rule—was introduced to strengthen investor protections but quickly faced legal challenges, including industry pushback and judicial scrutiny.

Now, the Trump administration’s intervention requesting a pause in the legal proceedings surrounding the rule adds another layer of uncertainty. According to the administration’s court filing, it is seeking to pause the appeals process to “allow time for consideration of the effect of the litigation on the agency’s regulatory activities and policy priorities.” This move could delay or even alter the future trajectory of fiduciary standards, leaving financial professionals questioning their next steps.

Regulatory uncertainty is nothing new for financial professionals. The ongoing shifts in fiduciary requirements highlight the need for firms to be prepared for continuous changes while maintaining best-interest practices.”

What This Means for Financial Professionals

The regulatory back-and-forth creates a challenging environment for firms that want to ensure compliance while maintaining operational efficiency. Here’s what wealth and asset managers should consider:

• Stay Proactive: Despite ongoing legal battles, regulators remain focused on protecting investors. Financial professionals should continue prioritizing best-interest recommendations and documentation to align with regulatory expectations.
• Prepare for Multiple Scenarios: The outcome of this latest pause remains uncertain. Whether the rule is modified, delayed, or upheld, firms should be prepared for various compliance scenarios to avoid last-minute adjustments.
• Leverage Technology for Compliance: Solutions like InvestorCOM’s compliance suite help firms navigate regulatory uncertainty by ensuring robust disclosure, record-keeping, and oversight—key pillars of fiduciary compliance.

Infographic: The Fiduciary Rule Rollercoaster – Compliance Strategies for 2025

Regulatory Expectations for Rollover Recommendations

With heightened scrutiny on rollover recommendations, financial professionals should take steps to ensure alignment with key regulatory frameworks:

Prohibited Transaction Exemption (PTE) 2020-02

The Department of Labor’s PTE 2020-02, titled “Improving Investment Advice for Workers & Retirees,” permits investment advice fiduciaries to receive compensation that would otherwise be prohibited, provided they adhere to specific conditions:

• Impartial Conduct Standards: Advisers must provide prudent investment advice, charge only reasonable compensation, and avoid misleading statements.
• Disclosure Requirements: Advisers must clearly disclose their fiduciary status, any material conflicts of interest, along with the rationale for their recommendation to the investor.
• Retrospective Review: An annual review must be conducted to assess compliance, with a written report provided to senior leadership.

FINRA’s 2025 Annual Regulatory Oversight Report

FINRA emphasizes compliance with Regulation Best Interest (Reg BI) and Form CRS for rollover recommendations:

• Best Interest Standard: Firms must ensure that rollover recommendations prioritize the client’s interests over firm profitability.
• Conflict Mitigation: Identifying and addressing conflicts that could influence investment advice.
• Clear Disclosures: Providing clients with information on fees, conflicts of interest, and the nature of the advisory relationship.

SEC’s 2025 Examination Priorities

The SEC’s 2025 examination priorities highlight its focus on:

• Adherence to Fiduciary Standards: Ensuring that investment advisers act in clients’ best interests.
• Rollover Recommendations Review: Scrutinizing recommendations to determine if they align with clients’ best interests.
• Regulatory Reporting and Disclosure: Evaluating whether firms comply with required disclosures and documentation standards.

Leveraging Technology for Enhanced Compliance

“Looking beyond the rule’s destination, firms stand to benefit by taking steps to transition manual processes to digital platforms – strengthening both operational efficiency and compliance oversight.

“Digitization offers a number of benefits, including improved data accuracy, enhanced supervision capabilities, and the ability to conduct real-time audits. Moreover, centralized technology solutions streamline documentation management, allowing firms to efficiently process high volumes of data while maintaining compliance across their advisory services. The shift to digital infrastructure also positions firms to better respond to emerging regulatory requirements and market dynamics. Cloud-based solutions offer scalability and facilitate rapid adaptation to new compliance mandates, while advanced analytics capabilities can help identify potential compliance issues before they become problems. Firms can also leverage automation to reduce manual errors, free up compliance staff for higher-value activities, and create more comprehensive audit trails for regulators. Additionally, digital platforms enhance collaboration between compliance, operations, and advisory teams, fostering a more integrated approach to risk management.”

Armin Sarabi, Managing Director, Bates Group

For firms operating with independent advisors or managing complex compliance requirements, technology can provide a standardized approach that simplifies oversight and ensures consistency in documenting advisory actions.

Staying Prepared in an Uncertain Environment

“The fiduciary rule may be evolving, but the commitment to acting in clients’ best interests remains steadfast. This core responsibility transcends any single regulation, requiring firms to uphold rigorous standards in client service, documentation, and compliance oversight. By proactively adopting best practices and integrating technology-driven solutions, firms can not only ensure regulatory compliance but also enhance operational efficiency and strengthen long-term client relationships.”

Armin Sarabi, Managing Director, Bates Group

Looking Ahead

With the legal landscape in flux, the best course of action is to maintain a strong compliance posture while monitoring ongoing developments. InvestorCOM remains committed to providing financial professionals with the tools and insights needed to navigate these evolving regulations.

As we’ve said before, “staying ahead of compliance changes is not just about meeting regulatory demands, but about ensuring the best outcomes for clients and maintaining trust in the industry.”

As the industry awaits further guidance, one thing is clear—regulatory uncertainty is here to stay. Firms that embrace compliance best practices and leverage technology will be best positioned to weather the changes ahead.

Stay tuned for further updates as the situation unfolds.