By Lisa Lambert
WASHINGTON (Reuters) - The U.S. Labor Department on Friday took the next step toward requiring brokers who provide retirement advice to follow a "fiduciary" standard of putting clients' interests first, a move that could roil the financial services industry.
The White House's Office of Management and Budget said on its website that it had received the department's final proposed rule. That follows an extended comment period for the proposal, which the Labor Department unveiled nine months ago.
On Friday, the Securities Industry and Financial Markets Association trade group called for the OMB to conduct a comprehensive analysis of the rule's potential costs and benefits.
The proposal aims to end potential conflicts of interest by brokers who advise on individual retirement accounts and to protect consumers from buying unnecessary or costly investment products that line brokers' pockets.
IRAs accounted for $7.3 trillion, or 30 percent, of U.S. retirement assets in September, according to trade group Investment Company Institute.
Under the Labor Department plan, brokers would have to act in clients' best interests, or as "fiduciaries," when advising about IRAs. For example, brokers can receive significant fees when they advise clients to "roll over" assets from their employer-sponsored retirement plans into IRAs.
Brokers now must recommend investments and strategies that are "suitable," based on factors such as investors' risk tolerance and age.
The industry has fought the fiduciary proposal since the department first proposed it in 2010, saying strict rules could limit retirement advice to small investors because fewer brokerages would offer them services.
The department, which regulates retirement plan advice, withdrew the initial proposal in 2011 after wide industry criticism.
A new version was proposed in April after a nudge from President Barack Obama and discussions with the industry and lawmakers, who considered blocking funds needed to implement a standard.
The text of the final proposal was not released on Friday but will become public after the OMB's review, which many expect to wrap up in the spring.
Critics want changes to when brokers should sign mandatory contracts in which they would pledge to uphold clients' best interests when giving retirement advice. They also want to extend an eight-month period for the rule's effective date that was part of the April version.
The department has received hundreds of thousands of comments, Labor Secretary Thomas Perez said this week.
(Reporting by Lisa Lambert; Additional reporting by Suzanne Barlyn; Editing by Lisa Von Ahn)