Incoming Senate Finance chairman Orrin Hatch, R-Utah, plans to reintroduce his SAFE Act. (Photo: AP)

Despite the fact that the GOP will control Congress in the new year, industry and political watchers predict ongoing Washington gridlock, and surmise that GOP dominance could be short-lived.

Come 2016, “the Republicans have the problem that the Democrats had in 2014: the vast majority of their [GOP] seats are up in 2016, a presidential year,” said Brian Graff, CEO of the American Society of Pension Professionals and Actuaries, during a recent webcast. There will be a “ton of vulnerable Republicans in blue-leaning states come 2016.”

With GOP control in 2015 comes “huge pressure” on Republicans to show that “they can get things done,” specifically tax reform, and break the gridlock that “Americans are so concerned about,” Graff said. However, just as much as Republicans “want to show that they can govern,” the Democrats and President Barack Obama “will want to block them” from doing so.

The list of regulations and legislation that the advisory industry will be watching — and lobbying to influence — in the new year is long. Advisory trade groups will continue to press for a bipartisan Senate bill to allow the Securities and Exchange Commission to collect user fees to fund advisor exams, while lawmakers have vowed to press ahead on comprehensive tax reform, as well as pension legislation.

The industry is also anticipating the release of fiduciary rules by the Department of Labor and the SEC. DOL’s redraft is slated for a January release, while, as of press time, SEC Chairwoman Mary Jo White had yet to “clarify” her position on what the agency should do regarding a uniform fiduciary standard for brokers and advisors.

White said in early November that she would provide in the “short term” her position on a fiduciary rule, despite the fact that the agency has not yet decided “whether to do something or what to do” about such a rulemaking.

The SEC’s recently released financial report stated that the agency’s 2015 priorities includes considering — once again — a fiduciary rulemaking, as well as finishing rules mandated by the Dodd-Frank Act.

Sen. Orrin Hatch, R-Utah, incoming chairman of the Senate Finance Committee, said in mid-December that he plans to reintroduce in 2015 his Secure Annuities for Employee Retirement (SAFE) Act, which includes language that would stop the DOL  from writing fiduciary rules for individual retirement accounts.

ASPPA’s Graff said to expect a “set of [DOL fiduciary] proposals in early spring next year,” adding that he believes the proposal will be “highly controversial” and that the redraft’s “prohibited transaction exemptions” will fail to address industry concerns with the proposal. Graff sees the controversial proposal eventually landing in Congress, where it will either be “fixed” or “killed.”

Indeed, the DOL’s fiduciary redraft, which is likely to come in January, “will be a major focus” for the Financial Services Institute in the New Year, said FSI president and CEO Dale Brown, as such rulemaking could “possibly hinder small investor access to IRA advice.” Brown said that FSI will “fight to protect the small investor’s access to quality, affordable financial advice” by opposing the DOL redraft, and that another FSI priority in the new year will be watching the progress of  the Financial Industry Regulatory Authority’s Comprehensive Automated Risk Data System (CARDS) proposal, which is receiving a lot of pushback from the industry and investors.

Committees to Watch

Rep. Paul Ryan, R-Wis., is set to be the next chairman of the House Ways and Means Committee, and Ryan “will run the committee with an iron fist,” said ASPPA’s political director, Jim Dornan, on a recent webcast. Graff added that Ryan has been a “proponent” of tax reform, and that he predicts the committee, under Ryan’s leadership, will start to issue “meaningful [tax reform] proposals in early spring.”

The House Education and Workforce chairman will be Rep. John Kline, R-Minn., while the new head of the Senate Health, Education, Labor & Pensions Committee, which oversees DOL, will be Sen. Lamar Alexander, R-Tenn.

Rep. Jeb Hensarling, R-Texas, will remain chairman of the House Financial Services Committee, while all bets still favor Sen. Richard Shelby, R-Ala., as the new head the Senate Banking Committee. The two committees share oversight responsibility for the SEC.

Aaron Klein, director of the Financial Regulatory Reform Initiative at the Bipartisan Policy Center in Washington, told ThinkAdvisor in a previous interview that a Republican takeover of the Senate “increases the probability [that there will be] a set of reforms to Dodd-Frank, which could improve the function of the bill.”

Klein, who served for more than eight years on the Senate Banking Committee’s staff and worked with Shelby, says that Shelby was “thoughtful, bipartisan and pragmatic.” As the potential new chairman of the committee, Shelby will likely “be interested in data security and consumer privacy.”

— Check out 5 Key Economic Trends for 2015: SIFMA on ThinkAdvisor.