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May 09, 2016 at 08:00 PM
The world in which financial advisors do business has become increasingly regulated, even more so thanks to folks like Bernie Madoff (an IA 25 member back in 2009, because not all influences are positive). Regulators and politicians continue to have a tremendous influence on the advisory business. For example, we included William Donaldson, former SEC chief, and Michael Oxley (as in Sarbanes-Oxley) in our very first IA 25. Former SEC Chief Mary Shapiro has appeared on the list seven times since 2006, when she was named head of FINRA’s predecessor, the National Association of Securities Dealers.
With the release of DOL’s rule to change the way advisors deliver retirement advice, we couldn’t ignore including Secretary Tom Perez among this year’s most influential people in and around the industry. In keeping with this year’s goal to recognize some of the lesser known influencers, though, we decided not to focus on big names like current SEC Chairwoman Mary Jo White (whose influence hasn’t been ignored; we recognized her in 2013 and 2014).
Following are some of the regulators who are reworking the advisory landscape.
Tom Perez, Department of Labor
For good or ill, Labor Secretary Thomas Perez will be credited with forever changing the nature of retirement advice.
It took six years to finalize a rule to redefine fiduciary under the Employee Retirement Income Security Act; Perez stepped in three years into the process and brought the rule to the finish line.
While support from the Obama Administration was viewed as a game changer in cementing the final rule’s completion, it was Perez’s personal commitment and willingness to listen to concerns from industry as well as political detractors on Capitol Hill that sealed the deal. “He went on a listening campaign,” Barbara Roper, director of investor protection for the Consumer Federation of America, said. “That helped him understand the concerns of rule skeptics, and to distinguish those concerns from the efforts of rule opponents who were never going to be won over.”
Roper, who supports the rule, said that Perez “understood where the compromise lay that would produce a rule that would satisfy supporters and skeptics alike.”
Those skeptics have criticized the rule from start to finish. Ken Bentsen, chairman and CEO of the Securities Industry and Financial Markets Association, said after the final rule’s release that he was most concerned with “the nature by which the government advocated for the rule,” and that the rule premise was based on that notion that “the brokerage industry’s business model ‘rests on bilking’ their clients.”
