Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. As has been the case throughout the month of December, this week’s recap focuses on the Department of Labor (“DOL”) fiduciary rule and its potential impact to RIA firms. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of December 10, 2016:
- Members of Donald Trump’s DOL Landing Team Oppose Fiduciary Rule (Author- Mark Schoeff Jr., Investment News)
Andrew Puzder, chief executive of the fast food company that owns Hardee’s and Carl’s Jr. hamburger chains, is President-elect Donald Trump’s pick to head the Department of Labor (“DOL”). However, Puzder has yet to speak publicly about his view on the DOL fiduciary rule. On the other hand, as Mark Schoeff Jr. notes, a number of future DOL landing team members including Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute, Nathan Mehrens, general counsel at Americans for Limited Government, and Rick Manning, president of Americans for Limited Government, have previously publicly criticized the rule.
- The DOL Fiduciary Rule Under Trump (Author- Anthony Domino Jr., Financial Advisor)
Anthony Domino Jr. writes that if President-elect Donald Trump does ultimately oppose the DOL fiduciary rule, there a number of different tactics he can deploy. These options include: reform, repeal, and delay. Meanwhile, Domino Jr. notes “the rule is still being challenged via litigation in several jurisdictions.” However, he ultimately concludes, “what I see as the most likely path and personal bias: a delay in the effective date with a more open and inclusive debate around some of the more controversial aspects.” His proposed solution also includes moving the rule’s enforcement to FINRA to “remove the threat of litigation as the only recourse available to those who have been harmed under the rule.”
- DOL Rule Should Bring Banner Year For Fee-Only Planners, Says NAPFA (Author- Christopher Robbins, Financial Advisor)
Christopher Robbins brings us this article that shares the optimistic outlook by two leaders of the National Association of Personal Financial Advisors (“NAPFA”). NAPFA CEO, Geoffrey Brown believes, “things are only going to get better for the community of fee-only professionals.” NAPFA’s incoming 2017 chairman, Tim Kober, thinks millennials have a huge impact on the growth in the industry that is predicted to happen. As for the DOL fiduciary rule, Brown and Kober both believe “the momentum behind the rule” will result in survival when Donald Trump assumes presidency.
- Fighting the DOL Rule is a Bad Marketing Plan (Author- Mark Miller, Wealth Management)
Mark Miller presents the case that regardless of the outcome of the DOL fiduciary rule, advisors in the industry should plan to fully implement it. This is mainly due to lack of trust consumers have of the financial industry. This lack of trust began with the financial crisis of 2008-2009 with a reportedly low number of only 27% of Americans having confidence in banks. The outcome of the fiduciary rule is still uncertain, but Miller believes the industry should still continue to prepare for complying to it for the time being. Kate McBride, chair of The Committee for the Fiduciary Standard, argues larger firms will end up “running away with a lot of business if they do it right.” McBride also elaborates on some key issues for firms to consider as they shift to a fiduciary model.
- SEC to Have Skeleton Crew in First Half of 2017 (Author- Mark Schoeff Jr., Investment News)
The start of 2017 is expected to be a “quiet period” for several months for the Securities and Exchange Commission (“SEC”). Republican Commissioner Michael Piwowar, Democratic Commissioner, Kara Stein, and several acting division heads will go on to guide the SEC when President-elect Donald Trump takes office. It is reported that it could be up to six months before two commissioners and a chair are nominated and confirmed by the Senate. While the introduction of a third party RIA examination rule may be delayed, traditional RIA audits will continue to be conducted as usual. For the time being, experts state the SEC will be “in a flux for several months” and “probably avoid controversial rulemakings and enforcement cases.”
Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!