The fiduciary rule is finally here. Well, most of it.

Key provisions of the rule take effect June 9, with the rest due in January 2018. By some counts, it has taken six years to arrive at this point ― and it's not still an entirely settled matter, given that the SEC and Department of Labor have indicated that they may change the regulatory framework once again.

To clarify what's settled and what's not, here's what this milestone means and what's coming next.

WHAT'S HAPPENING?
The short version: Tens of thousands of brokers will now be fiduciaries.

The longer version is that advisers and firms will have to comply with the parts of the fiduciary rule that go into effect at the end of this week, notably the impartial conduct standards.

The impartial conduct standards are intended to protect consumers and require advisers to:

  • Give advice that is in the best interest of the client
  • Charge no more than reasonable compensation
  • Make no misleading statements about investment transactions, compensation and conflicts of interest

"It's a conduct-based standard. There's no disclosure or agreements or website during the transition period," says Fred Reish, an ERISA attorney and partner at law firm Drinker Biddle.
Other aspects to note: certain accounts will be grandfathered in under the rule as of June 9, and firms' plans — ranging form compliance to knew pay structures — will be officially implemented. For example, UBS said it was modifying how it compensates its roughly 7,000 advisers with regard to advice they provide clients on retirement accounts.

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WHEN DOES IT TAKE EFFECT?
Firms and advisers don't actually have to be compliant until 11:59 on June 9, according to a recent FAQ by the Labor Department.

"When people are at work on June 9, it isn't actually applicable," Reish says. "It actually goes into effect Monday, if you're following the business calendar."

The department said it was doing this to facilitate compliance so firms would be able to test "compliance systems over the weekend with reduced risk of disruption to the ongoing delivery of advisory services."

Reish notes another wrinkle: advisers have to be in compliance on local time, which means California-based advisers have an extra three hours over their New York-based peers (Hawaiian advisers get five extra hours).

Secretary of Labor Alexander Acosta recently declined to delay the fiduciary rule's applicability a second time, but pledged to complete a review of the rule ordered by President Trump. Bloomberg News

WHEN DO CLIENTS START HEARING ABOUT IT?
They already have.

"We've seen large firms send out letters saying this is what the DoL rule means to you the investor. They're sending things out continually, starting this month," says Tim Slavin, senior vice president of retirement strategies at Broadridge.

Slavin says he's even gotten notices for personal accounts he holds.

But additional documentation, particularly around the best interest contract exemption, will go out until later this year.

DIDN'T THE LABOR DEPARTMENT SAY THEY WOULDN'T ENFORCE THE RULE?
Not quite.

"The DoL and IRS said they would not enforce the rules [during the transition period] if there is a diligent and good faith effort to comply. That means that if someone is not making a good faith effort then there isn't a non-enforcement policy," Reish says.

Plus, private litigation is possible.

"The DoL and IRS can't control that. So it doesn't mean everyone is off the hook for the next six months," he says.

BUT WHAT'S GOING ON WITH THAT A REVIEW?
Trump asked the Labor Department to review the fiduciary rule in a Feb. 3 memo. The president laid out broad criteria for potentially repealing or rescinding the regulation.

Secretary Acosta, who was Trump's second choice to lead the agency, declined last month to delay the rule's applicability date a second time. But he said that the department would push forward with the review of the regulation.

Industry watchers anticipate Acosta could delay the second applicability date of January 2018, giving his agency time to finish its review and coordinate efforts with the SEC.

In fact, the Labor Department says it recognizes that some long-term compliance solutions, such as so-called clean shares "may in some cases require substantial time."

Firms are exploring different avenues of averting compensation issues that may arise when brokerage clients purchase different mutual fund share classes. One solution reportedly under consideration would be T shares, which levelize pricing across fund families. This would theoretically mitigate conflicts of interest that arise due to pricing differences between share classes and break point schedules.

"We are working through what will be the ultimate share class for mutual funds," says Jamie Price CEO of Advisor Group, an IBD with about 5,000 brokers. Price adds his firm may finish other aspects of its compliance plan in October.

The Labor Department says it understands that these approaches may need more time to be implemented. Therefore, it wants to hear from various stakeholders, hinting that additional implementation delays may be forthcoming.

"I think the Republicans will be sympathetic to the business community saying that whatever your final rule is going to be, we need more time to get in compliance," Reish says.

Given the administrative hoops a department has to go through in order to do a rule-making, Acosta will likely make an announcement in August or September, according to Reish. Doing so would give the department ample time to solicit public comments on its proposal.

But until the regulators give say otherwise, the industry looks set to continue planning for final implementation on New Year's Day, 2018. Mark your calendars.