Top RIA Compliance News Articles for the Week of November 5, 2016

1. Trump Administration Must Overcome Obstacles to Kill DOL Fiduciary Rule (Author- Mark Schoeff Jr., Investment News)

With the new president-elect of Donald Trump, opponents of the Department of Labor (DOL) fiduciary rule are hoping that action will be taken to stop its implementation. However, as Mark Schoeff writes, the new presidency does not mean the new regulation can just be “ripped up.”  Stuart Shapiro, a professor of public policy at Rutgers University, claims, “it’s hard to write a regulation, which bothers people who like regulation, and it’s hard to get rid of a regulation, which bothers people who don’t like regulation.” A new administration must propose a new rule and go through full regulatory process in order for the regulation to be put to a stop. However, others speculate that could be other measures taken to suspend the implementation. President of the Financial Services Institute, Dale Brown, believes “based on the results of the election, the future of the DOL rule is uncertain.” At this moment, it’s quite difficult to speculate as to what may or may not happen so advisers need to continue to plan for the rule to be implemented.

2. Fiduciary Rule Likely to Survive Trump Presidency (Author-  David Armstrong, Wealth Management)

In this take with a bit of a different angle, Skip Schweiss, head of advisor advocacy for TD Ameritrade Institutional, said it might be too late to unwind. “The rule was finalized in April, and was effective in June, with a compliance date in April 2017. I do not see anything changing here. But of course, forecasting the future is risky business,” he said in a statement. Duane Thompson believes it is unlikely a Trump administration will overturn the rule, though new legislation could be drafted to change it yet again. But that is a “time-consuming legislative process,” he said. While it may be too late to pump the breaks on the impeding rule, some believe broader industry regulations going forward won’t be a priority. However, once again, it’s hard to speculate on any of these future topics given the large amount of uncertainty. 

3. Ex-SEC Commissioner Paul Atkins, No Fan of Dodd-Frank, Leads Trump’s Financial-Agency Review (Author- C. Ryan Barber, The National Law Journal)

According to Ryan Barber, Donald Trump’s transition team includes the following key people: Paul Atkins (chief executive of the financial and regulatory consulting firm, Patomak Global Partners), Bill Walton (chairman of a private equity firm), and David Malpass (former chief economist for Bear Sterns). According to Donald Trump’s transition team, they believe “The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer.” However, what’s currently unknown is whether there will be momentum to fully overturn Dodd-Frank or instead modify pieces of the legislation. In either scenario, we believe the impact to RIA firms is likely to be a slight disruption but not an overly significant event for the vast majority of investment advisory firms. However, a complete overturn of the rule could call into question as to whether private funds would still need to continue to register as an RIA or exempt reporting advisers.

4. Forget Robos; Regulations Now Top Driver of Advisor Tech (Author- Timothy Welsh, Think Advisor)

Joel Bruckenstein’s Technology Tools for Today (T3) is a series of conferences where the advisor technology industry meets twice a year to discuss new developments and launch new products with the intention of making things easier for advisors. Popular topics at this year’s T3 included “how to comply with growing regulatory and cybersecurity requirements.” Since the Department of Labor (DOL) fiduciary rule is expected to require much more documentation and added workflows, brainstorming technology tools that will assist in these possible tasks was a key concept. In particular, cybersecurity continues to be a trending regulatory topic in the industry..

5. SEC Seeking 39% Budget Hike, Money For New HQ (Author- Ted Knutson, Financial Advisor)

For the 2018 fiscal year, Ted Knutson reports that the SEC is requesting $2.2 billion, which is a 39% budget hike. Not only will the money be used to hire new examiners but there are also plans to relocate to a new headquarters. The request won’t be finalized until Donald Trump takes office. However, Knutson notes that, “considering that Trump has vowed to repeal the Dodd-Frank Act, which gave the SEC more duties, changes are good and he would reduce the 39 percent to single digits or possibly nothing.”

Don’t forget to check out last week’s top RIA compliance news articles on third party RIA audits and cybersecurity. Be sure to check back next Friday for next week’s top articles!