Washington INsider

Washington INsiderblog

Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

Aug 13, 2015, 3:58 PM EST

If Obama holds firm, here's what the DOL fiduciary rule will end up looking like

By Mark Schoeff Jr.

After four days of hearings at the Labor Department, the fate of a proposal to raise investment advice standards for retirement accounts will be determined by one thing: the strength of President Barack Obama's political backbone.If Mr. Obama holds firm in support of the fiduciary rule, designed to curb conflicts of interest for brokers working with 401(k) and individual retirement accounts, then it will be finalized next spring with modest changes.Where does this week's hearings — in which the DOL heard the usual arguments from dozens of proponents and opponents — leave us?Watching the White House.The bottom line is that the DOL is an executive agency that operates at the will of Mr. Obama. He has said that protecting investors from inappropriate, high-fee investments in their retirement portfolios is a key part of his “middle-class economics” initiative. So if the government sees this priority through, then... Read full post

May 4, 2015, 4:57 PM EST

Finra's longtime critics become its supporters and vice versa

By Mark Schoeff Jr.

Critics of the Financial Industry Regulatory Authority Inc., the industry-funded broker-dealer regulator, have been pining for Congress to delve into the organization's workings with the same fervor it applies to the Securities and Exchange Commission.For the first time in the five years I've been covering Finra, the regulator appeared before a congressional committee on May 1 to discuss itself, not to testify on a particular rule. The result was not what Finra critics had in mind. The majority Republicans did indeed scrutinize the regulator. But they did so from the viewpoint of wanting Finra to put more “self” into “self-regulatory organization”.Rep. Scott Garrett, R-N.J., chairman of the House Financial Services subcommittee on capital markets, wasted no time launching an attack on Finra when he gaveled in a hearing he said would provide “much-needed oversight of Finra.”'DEPUTY SEC'“Despite... Read full post

Apr 30, 2015, 6:51 AM EST

Democratic senators split from White House on DOL fiduciary rule

By Mark Schoeff Jr.

Opposition to a Department of Labor proposal designed to minimize broker conflicts of interest surrounding retirement accounts is once again becoming bipartisan, despite strong White House backing for the measure.The DOL rule was released earlier this month, with a July 6 deadline for comment. The financial industry, which killed a similar proposal in 2011, immediately pushed for a deadline extension, saying more time was required to digest the proposal that runs hundreds of pages.The effort looked like an attempt to delay the rule to death, something the industry and Republicans would welcome. But now Sen. Jon Tester, D-Mont., also wants to extend the comment period. “This is a complex rule that has far-reaching impacts, so Sen. Tester believes we need to ensure folks have time to weigh in,” Dave Kuntz, Mr. Tester's spokesman, wrote in an email. A DOL spokesman declined to comment on whether the agency would extend the... Read full post

Apr 10, 2015, 2:50 PM EST

What a Hillary Clinton presidency would mean for financial advisers

By Mark Schoeff Jr.

It wasn't quite as interminable as the wait for Godot, but Hillary Rodham Clinton is finally arriving on the presidential election scene. At least, if the scuttlebutt today is true: that she's going to announce her candidacy Sunday. What a Hillary presidency — if she were to make it all the way to the Oval Office — would mean for investment advisers and brokers will take a while longer to answer.When the former secretary of state, New York senator and first lady launches her campaign, one question for investment advice professionals will be whether she will listen to Sen. Elizabeth Warren, D-Mass., or to Wall Street on the topic of fiduciary duty.Ms. Warren has embraced raising investment-advice standards for brokers, becoming a champion of a pending Department of Labor rule that would require brokers to act in the best interest of clients when working with retirement accounts. A prominent figure at an event at AARP in... Read full post

Sep 5, 2014, 3:41 PM EST

Chairman White's political will may determine fiduciary-duty outcome

By Mark Schoeff Jr.

Like everything else in Washington, the outcome of the debate over whether to raise investment advice standards for brokers will come down to politics — or, more precisely, political will.Securities and Exchange Commission Chairman Mary Jo White has said that she wants the agency to decide by the end of the year whether it will proceed with a rule that would establish a uniform fiduciary duty for retail investment advice. Alternatively, the SEC may choose to pursue other policy changes that fall short of a rule.If the SEC moves ahead with a rule, the outcome would likely be a regulation that forces brokers to act in the best interests of their clients, a bar that investment advisers already meet. Brokers currently adhere to a suitability standard that allows them to sell higher-priced products as long as they fit a client's investment needs.The Dodd-Frank financial reform law gave the SEC the authority to promulgate a fiduciary-... Read full post

Jul 21, 2014, 4:36 PM EST

Can an adviser affiliated with an insurance company be fee only? Yes.

By Mark Schoeff Jr.

For nearly two years, the issue of compensation descriptions has roiled the investment-advice business. The topic becomes even trickier when insurance licenses are thrown into the mix.Whether investment advisers like it or not, the Certified Financial Planner Board of Standards Inc. rules on planners with a broker-dealer affiliation are clear. They cannot claim fee-only status — even if they charge their clients only fees — if they work for a firm that has a B-D arm, because that side of the house can collect commissions.With insurance affiliation it's less clear. For planners who don't sell insurance but work in states that require insurance licenses in order to provide advice on the products, there's a wrinkle. Some states make licensing contingent on an adviser's appointment with an insurance firm, which obviously can collect commissions. The appointment affiliates planners with a commission-taking company. That... Read full post

Jul 11, 2014, 2:13 PM EST

Political battle over 'tax and spend' unfolds in ways that help, hurt advisers

By Mark Schoeff Jr.

The two U.S. legislative branch chambers are supposed to be equal. The House, however, has been holding sway against the Senate in ways that are both good and bad for investment advisers.The most recent example occurred Thursday, when the Senate Finance Committee dropped a provision from its highway funding bill that would have required the distribution of inherited individual retirement accounts within five years of the death of the account holder.Senate Finance Committee Chairman Ron Wyden, D-Ore., had originally included it to help raise revenue to pay for road projects over the next 10 years that may be halted if the Highway Trust Fund runs out of money later this summer. (See also: Limits to stretch IRAs floated to pay for highway repairs)In a statement in late June, Mr. Wyden said he had “bent over backward to come up with the most benign, agreeable offsets possible” and that the bill included measures to “boost ... Read full post

Jun 13, 2014, 2:47 PM EST

Mr. Adviser goes to Washington

By Mark Schoeff Jr.

More than two dozen members of the Investment Adviser Association chose an auspicious time to roam Capitol Hill on Thursday to meet with lawmakers and their staffs during the organization's Lobbying Day. The House was buzzing with intrigue about the downfall of Majority Leader Eric Cantor, R-Va., in a primary election earlier in the week — the first time anyone in a position that high had lost in a primary. Mr. Cantor's demise will increase partisan tension in Washington and further ensure that not much gets done in in the capital. For investment advisers, whose issues are usually ignored by lawmakers who don't understand their industry, it makes pushing their agenda even more difficult. But Bernie Clark, executive vice president of advisor services at Charles Schwab & Co. Inc., hasn't lost faith. He enthusiastically participated in IAA's Lobbying Day, educating legislators and their aides about the characteristics of the... Read full post

Apr 14, 2014, 5:10 PM EST

When a regulator like Rick Fleming sounds more like a politician, it could be a good thing

By Mark Schoeff Jr.

When the new Securities and Exchange Commission's investor advocate introduced himself publicly last week, he sounded more like a politician than a regulator. For investor protection, that could be a good thing.In his first public statement, Rick Fleming, talked about being raised by a single mother who was taking care of four kids while working as a school secretary.“I grew up poor,” Mr. Fleming told an April 10 meeting of the SEC Investor Advisory Committee. Like many politicians who debate at the U.S. Capitol, a few blocks away from the SEC headquarters, Mr. Fleming put his office in context by telling a story and establishing the narrative of helping the common person.“Going from a place like that to a place around the table like this — if you've done that, you know the American Dream is not just some sappy sentimental idea. It's something that I believe in,” Mr. Fleming said. “Investing is an... Read full post

Mar 21, 2014, 5:03 PM EST

SIFMA, Chamber give thumbs down to Finra's data collection proposal

By Mark Schoeff Jr.

Two more financial industry groups have called on Finra to rethink a proposal to collect reams of brokerage account information that the organization says will help it better detect fraudulent sales practices.The Securities Industry and Financial Markets Association, the trade group for large broker-dealers, and the U.S. Chamber of Commerce filed comment letters Friday and late Thursday, respectively, opposing Finra's Comprehensive Automated Risk Data System. They join the Financial Services Institute Inc., a lobbying group for independent broker-dealers, in criticizing the idea.The broker-dealer regulator put out a concept proposal in December. The comment deadline was Friday.SIFMA warned that financial firms would be burdened with significant technology and compliance costs and that customers' financial privacy would be put at risk.“CARDS would require firms to develop new systems and/or dramatically modify existing systems to... Read full post

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