Retirement advisors and insurance agents have long known that shifting political winds in the U.S. federal government would continue to affect their businesses and processes.
Many in the finance industry supported Donald Trump for president expressly because they hoped for the type of decisive action that arrived Friday in the form of Presidential Executive Order on Core Principles for Regulating the United States Financial System and the Presidential Memorandum on Fiduciary Duty Rule.
Both orders instruct the corresponding regulatory agencies to review and possibly revise or repeal the U.S. Department of Labor fiduciary rule, an effort to protect consumers from predatory financial advice that is currently set to take effect in April, as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in the wake of the financial crisis that hit from 2007 to 2009.
In a press briefing held on Feb. 3, the same day the executive orders came out, White House Press Secretary Sean Spicer said, “The Dodd-Frank Act is a disastrous policy that’s hindering our markets, reducing the availability of credit, and crippling our economy’s ability to grow and create jobs. It imposed hundreds of new regulations on financial institutions while establishing unaccountable and unconstitutional new agency that does not adequately protect consumers.”
Spicer also blasted the DOL fiduciary rule. “The rule’s intent may be to have provided retirees and others with better financial advice, but, in reality, its effect has been to limit the financial services that are available to them,” Spicer said.
Related: The DOL rule: A case for the courts
What follows are some immediate reactions from the finance industry to these presidential directives.
The Insured Retirement Institute was one of the first organizations to applaud Trump. The IRI said it supports the need for “a thoughtful and comprehensive” review of the fiduciary rule and the Dodd-Frank Act.
“IRI and our members have long supported a best interest standard of care for financial professionals, and have already taken extensive steps to move in that direction,” IRI President Cathy Weatherford said in a statement. “We continue to have significant concerns about the (fiduciary) rule and its harmful impact on retirement savers. The rule makes sweeping changes to the existing regulatory framework that will ultimately make it harder for savers to plan for retirement by depriving them of access to affordable holistic financial advice and a wide range of investment options. These concerns, which drove us to pursue our pending legal challenge to the rule, are further exacerbated by the overly aggressive compliance deadline provided by the DOL.”
Weatherford said the IRI wants to work with the Trump administration to develop policy “that will ensure all Americans have access to the advice and products they need to achieve a secure retirement.”
Lawrence Holzberg, president of the New York state chapter of the National Association of Insurance and Financial Advisors, also praised the president’s executive orders. NAIFA has long been critical of the DOL fiduciary rule as written, and the group took legal action to block implementation of the rule.
“The president has delayed a rule that places burdensome and costly requirements on financial advisors in NYS—forcing many of them out of business and limiting the ability of lower and middle-income Americans to access needed services and advice,” Holzberg said in his statement. “Life insurance agents and financial advisors already adhere to high ethical standards and tough state regulation.”
The National Association for Fixed Annuities has also been critical of the fiduciary rule. Its statement on Monday linked many of its member’s concerns about regulatory overreach to Spicer’s comments.
Related: NAFA vows to continue DOL rule fight
“NAFA will continue to monitor all developments regarding the fiduciary rule and work to achieve a positive outcome,” NAFA said in its statement. NAFA said its members await prompt information and clarification about the direction of any new finance-industry lawmaking.
In recent comments to the Wall Street Journal, NAFA Executive Director Chip Anderson talked about why the fiduciary rule has caused so much concern among agents and advisors. Anderson told that newspaper that the rule’s chilling effect on advisement services would be “immediate and devastating.”
A coalition that included the Consumer Federation of America and the American Federation of State, County and Municipal Employees, the country’s largest public employee trade union, attacked the president’s executive orders.
“President Trump continues his streak of throwing middle class Americans under the bus – the very people he promised to protect on the campaign trail,” the coalition said. “Rolling back conflict of interest protections for retirement savings will take tens of billions of dollars a year out of the pockets of hard-working Americans in order to enrich powerful Wall Street interests… If the Department of Labor follows through on this threat and delays and repeals the rule, brokers and insurance agents will be free to go back to putting their own financial interests ahead of the interests of their clients, recommending investments that are profitable for the firm but not the customer.”
Have you Liked us on Facebook?