The biggest issue for advisors in the just-concluded year was the Department of Labor’s long-aborning final rule under which any advisor providing advice in retirement plans is deemed a fiduciary under ERISA. However, the election of Republican Donald Trump as president, and the GOP’s newfound control of both houses in the next Congress, have put the rule in a kind of political limbo. (See this month’s cover story beginning on page 20 for a broader look at how changes in Washington will affect advisors).
While companies that partner with advisors, and advisors themselves, are busy taking steps to comply with the DOL rule, in mid-December the U.S. Chamber of Commerce announced it is “already working” with transition officials to “undo” the DOL fiduciary rule.
In a Dec. 12 blog post, the U.S. Chamber’s President and CEO Thomas Donohue wrote that the Chamber is “urging immediate action to undo” Labor’s fiduciary rule because “if enacted, it would choke economic growth, increase frivolous litigation against financial advisors and make saving for retirement more difficult for hardworking Americans.”
President-elect Trump, Donohue wrote, “will have the power to quickly undo some of President Obama’s executive orders by issuing executive orders of his own,” but other regulatory reforms will require going through “the lengthier and more complicated rulemaking process.”
The DOL’s rule would be one of those reforms.
The Chamber is among the groups that has filed a lawsuit against the DOL’s rule in U.S. District Court for the Northern District of Texas, along with other plaintiffs including SIFMA and the Financial Services Institute.
Judge Barbara M.G. Lynn heard oral arguments in the case on Nov. 17. Her decision in the case was anticipated by the end of 2016.
The U.S. Chamber’s Donohue wrote in his blog post that “congressional leaders should prioritize legislation that would reform the way rules are made and enforced,” noting that the Chamber led a coalition of 380 business associations and local chambers of commerce to urge House leaders to move quickly on the Regulatory Accountability Act in the next Congress. Donohue said that bill would make the regulatory process more transparent, agencies more accountable and “regulations better targeted to solve existing problems without creating new ones.”
SIFMA Lays Out 2017 Priorities
While SIFMA has challenged one fiduciary rule in court, the securities industry group said that it favors another such standard from the Securities and Exchange Commission. In a Dec. 7 briefing with reporters, SIFMA President and CEO Ken Bentsen outlined the issues on which the organization will focus in the new year; a uniform fiduciary standard, he said, continues to be at the top of SIFMA’s advocacy priorities.
While SIFMA feels that the DOL fiduciary rule would result in less investor choice and greater cost, the reasons it sued to vacate the rule, Bentsen said SIFMA has long supported an action by the SEC to establish a uniform standard of care for broker-dealers and advisors when providing personalized investment advice about securities to retail customers.
“I think our position with respect to the Department of Labor is extremely well known; obviously we’re involved in litigation with that,” Bentsen said. “We continue to believe that the SEC is the appropriate agency here.”
Part of President-elect Trump’s agenda has been tax reform, and Bentsen suggested tax reform was a goal SIFMA’s members could get behind. Reform, he said, “is something that we’ve been focused on for many years,” listing “international, corporate and individual” taxes as examples of revenue-generating policies that should be addressed.