Karl Rove, the former deputy chief of staff to former President George W. Bush, made a prescient remark at the MarketCounsel Summit in early December, just two months before the Iowa caucuses: presidential candidate Ted Cruz wins Iowa as well as Donald Trump supporters in the state.
Just a week after Rove’s remark, Cruz did indeed pull ahead of Trump in Iowa. Rove told the MarketCounsel attendees that the “large cast of [Republican] characters” will ensure that the GOP race for the White House “will take longer,” with the candidates not whittled down to “maybe three or four, or maybe two” until about March 14. Trump, he said, “won’t win Iowa.”
But both Rove and David Plouffe, President Barack Obama’s 2008 campaign manager, opined at the Summit, held in Miami, that Trump also will not be the Republican presidential nominee.
“Trump has hurt the Republican Party; it won’t be lasting because he won’t be the nominee,” Rove said. Plouffe agreed, stating that while Trump will “win some states,” he’s not going to be able “to consolidate” wins in a bunch of states.
Meanwhile, Democratic presidential candidate Hillary Clinton, Plouffe predicted, “wins everything,” with her “biggest hurdle” being winning over New Hampshire voters.
As to the health care exchange put in place by the Affordable Care Act, Plouffe noted that lawmakers, “whether they support or oppose” the ACA, “are tired of votes by Congress to get rid of the ACA.” Hopefully, “the debate will return to what’s working, and then there will be innovation in the states,” he said, adding that “Medicare expansion will be the next big thing.”
Both Plouffe and Rove also agreed that the next president has a gem in Rep. Paul Ryan, R-Wis., the newly christened House Speaker. Rove said Ryan would focus on restructuring entitlement programs like Social Security and Medicare, as “he has been thinking for years” about how to tackle the nation’s debt woes. “The next president ought to recognize they have a good thing there [with Ryan] and they can work with him.”
Added Plouffe: The nation “can finally get a long-term budget deal; I think he will be cognizant of that. He’s there to do big things.”
Exams, Exams, Fiduciary
Presidential politics wasn’t the only topic tackled at the MarketCounsel Summit. Other hotbed issues that will be clarified in the new year include the ongoing debate of what to do about the number of advisor exams, the upcoming third-party exam rule for advisors to be issued by the SEC, as well as the Department of Labor’s rule to redefine fiduciary under the Employee Retirement Income Security Act.
Andrew Wels, MarketCounsel’s chief regulatory counsel, said during the four-day Summit that the problem with advisor exams is not the “frequency,” rather “it’s the content” of the exams. “Routine exams are no longer routine; they go on for ages,” Wels said, adding that SEC examiners “are frequently not well versed with the [RIA] model.
The solution? “Better exams through the creation of our own self-regulatory organization that understands our industry,” Wels opined. The SRO, he said, should operate “within the constraints of the SEC’s umbrella.”
Said Wels: “We control our own destiny,” adding that “someone in the industry needs to take the lead and create the model” and present it to Congress. The “next Congress is ripe for that.”
Former SEC Inspector General David Kotz stated at the Summit that since RIAs have to explain their business even to the SEC examiners, the issue with advisor exams is “competence” of the examiners. The agency missed the Bernie Madoff Ponzi scheme due to lack of competence, he charged.
Kotz noted his concern that the SEC “lumps” advisors and brokers together, and that the agency is challenged to understand “what they do and how they do it; that’s a challenge in exams as well as rules and regulations.”