Washington INsider

Washington INsiderblog

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

Feb 4, 2014, 6:02 PM EST

Advocate says no SEC action may be preferable on fiduciary duty

By Mark Schoeff Jr.

One of the newest Securities and Exchange Commission members last week made it clear that the SEC is split on whether to proceed with a rule that would raise investment advice standards for brokers.Following a speech at the U.S. Chamber of Commerce, I asked SEC member Michael Piwowar where he stood on a regulation that would impose a universal fiduciary duty for anyone providing retail investment advice.He was forthright in stating his doubts about the need for a rule that would force brokers to act in the best interests of their clients, a bar that investment advisers must now meet but a distinction that is lost on most investors.“Even if it's the case that more confusion does lead to worse outcomes, it's not clear to me that that's enough to justify engaging in rule making,” Mr. Piwowar said. “At that point, we need to consider whether we can do more on the investor education front and the disclosure front.... Read full post

Jan 16, 2014, 1:46 PM EST

SEC on compliance: Do what you say you're doing

By Mark Schoeff Jr.

Whether a topic is appearing on the Securities and Exchange Commission's examination priority list for the first time, such as wrap-fee programs, or is making an encore appearance, such as dually registered advisers, the agency is looking at the intersection between what is good for the adviser and what is good for the client.“Conflicts of interest are the primary focus in a disclosure-based system,” Jane Jarcho, SEC national associate director of the investment adviser and investment company examination program, said this week in an interview. “As a fiduciary, you have to disclose any conflicts or potential conflicts.”That theme runs throughout the list. Here is Ms. Jarcho's take on some of the items.Wrap-fee programs: The SEC will assess whether financial advisers are fulfilling fiduciary and contractual obligations to clients when using these vehicles. A particular concern is whether buy-and-hold clients are... Read full post

Jan 7, 2014, 1:12 PM EST

Fate of tax extenders will be clear only after long wait

By Mark Schoeff Jr.

As Congress goes back to work this week, broad tax reform appears to be dead, and the fate of tax extenders may not be resolved until late in the year.It is shaping up to be another wait-and-see exercise on tax policy, which will once again make tax planning a challenge for investment advisers and their clients.Just before going on its holiday recess, Congress reached a bipartisan agreement on a budget framework for the next two years that set spending levels and prevents a government shutdown. But the accord avoided tax reform.“It tells us that they haven't found any common ground on the direction of tax policy for the next year, or they would have addressed it,” said Timothy Steffen, senior vice president and director of financial planning at Robert W. Baird & Co. Inc.The budget agreement didn't contain a road map for broad tax reform nor did it deal with the 57 so-called tax extenders, or tax breaks that have been... Read full post

Sep 20, 2013, 4:44 PM EST

Finra goes social

By Mark Schoeff Jr.

Most investment advisers shudder when they think about Finra in relation to social media. They worry about complying with the broker-dealer regulator's guidance on Internet behavior and wonder whether their next Tweet or Facebook post may get them into trouble.This week, however, the Financial Industry Regulatory Authority Inc. reminded advisers that it's not just focused on monitoring what others are doing in cyberspace -- it's a participant in social media itself. On Thursday, I knew that the Finra board was due to make a big decision about a rule on broker-dealer compensation. I checked its website obsessively for any clue about what had transpired. While I was waiting for something to be posted, I scrolled through my Twitter feed – and found the answer I was seeking.Finra made the board's move known by tweeting a link to its press release. The statement itself didn't hit my inbox until several minutes later. Those of us on... Read full post

Aug 23, 2013, 2:55 PM EST

Festive fall on tap for Washington but action is another thing

By Mark Schoeff Jr.

Investment advisers are once again wondering what will happen with tax policy when Congress returns to work next month after its summer recess.The fall is likely to be festive, with lawmakers and the White House wrangling over the federal budget and the debt ceiling in a tussle that might not be resolved until December. Along the way, a government shutdown and financial-market turmoil are risks.Even though many tax rates were settled in January's fiscal cliff bill, negotiations may put some taxes in play.“Revenue is going to be needed from a lot of different sources,” said Stanley Smiley, senior vice president of the advance planning group at Cetera Financial Group. “Nothing seems to be permanent [with Congress].” Dusty Wallace, director of financial planning at Lee Financial Corp., said many of her clients have seen tax increases as high as $10,000 this year. But she's not confident that's the end of the story.... Read full post

Aug 15, 2013, 4:01 PM EST

Lobbyists put hands in sausage maker

By Mark Schoeff Jr.

When Congress comes back from its summer recess in September, lawmakers will only have a few weeks to press the Department of Labor to delay a pending proposal to strengthen investment-advice rules for retirement plans.Originally floated in 2010, it would expand the definition of “fiduciary” and apply retirement-law advice requirements on a wider range of advisers. It was withdrawn following fierce opposition from the financial industry, which asserted that the rule would threaten commissions for brokers selling Individual Retirement Accounts. The DOL maintains that tougher rules are required to protect investors from conflicted advice, as they build their retirement nest eggs on their own through defined contribution plans. A re-proposal is expected in October. With the clock ticking, the situation is becoming tense – and lobbyists are earning their money. But are they going too far?A recent article in the magazine... Read full post

Aug 2, 2013, 1:58 PM EST

At least one new SEC commish to bolster cost-benefit push

By Mark Schoeff Jr.

An emphasis on the costs and benefits of regulations at the Securities and Exchange Commission is likely to grow stronger as it welcomes two new members.The Senate unanimously confirmed Democrat Kara Stein and Republican Michael Piwowar on Thursday night to serve as SEC commissioners. Both former Senate Banking Committee aides, Ms. Stein replaces Elisse Walter and Mr. Piwowar takes over for Troy Paredes. The Senate also confirmed new SEC Chairman Mary Jo White for a full five-year term, until June 2019.Mr. Piwowar represents a different perspective for the commission, which is often comprised of lawyers. He was the Senate banking panel's chief Republican economist. Following the tradition of executive branch nominees, he revealed little about his policy preferences during the confirmation process.But it's probably safe to say that his ascension to the five-member SEC underscores Republican insistence that the agency rigorously review... Read full post

Jul 16, 2013, 1:53 PM EST

SEC's plan for adviser SRO has left the building, along with Walter

By Mark Schoeff Jr.

Within a matter of weeks, a new SEC will most likely be in place. That could mean a change in atmosphere for an issue important to investment advisers.Nominees for two Securities and Exchange Commission positions — Democrat Kara Stein and Republican Michael Piwowar — should have smooth sailing to their confirmations. Currently Senate aides, they faced no opposition in a Senate Banking Committee hearing last month.A committee vote on them — and several other nominees — was postponed from today until Thursday. Ms. Stein and Mr. Piwowar are likely to be okayed unanimously by the panel. The full Senate will probably vote soon.“They're going to get approved by the Senate with overwhelming bipartisan support,” said Neil Simon, vice president for government relations at the Investment Adviser Association. “It's just a question of how and when.”Similar strong backing on Thursday in the committee... Read full post

Jun 28, 2013, 11:40 AM EST

Can estate tax legislation make it on its own?

By Mark Schoeff Jr.

Washington suddenly turned its attention back to broad tax reform on Thursday, when the leaders of the Senate tax-writing committee challenged their colleagues to think anew about the code.Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and the panel's top-ranking Republican, Sen. Orrin Hatch, R-Utah, hypothetically eliminated all tax breaks and asked the other 98 senators for ideas on which should be added back.This assignment, which is due on July 26, brought new purpose to the Senate's efforts on comprehensive reform. The House Ways and Means Committee also has been laying the groundwork for reform.Despite this activity, pessimism remains high about Congress' ability to accomplish an overhaul of the tax code by the end of 2014, given the wide policy divide between the House and Senate on most issues. In addition, the Obama administration has shown little interest in the topic.But can the code be tweaked short of... Read full post

Jun 4, 2013, 8:26 AM EST

Say what? Advisers ask lawmakers for more regulation, fees

By Mark Schoeff Jr.

A couple dozen investment advisers fanned out across Capitol Hill with an unusual “ask” of lawmakers today. They weren't seeking less regulation and lower fees, they were seeking more.The Investment Adviser Association sent about 45 members to the Hill to lobby legislators and their aides in favor of legislation that would authorize the Securities and Exchange Commission to charge advisers user fees to fund adviser examinations. The bill, introduced in March by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, is designed to increase the number of adviser exams each year. The SEC has said that it can examine annually only about 8% of the nearly 11,000 registered investment advisers.Skip Schweiss, managing director of adviser advocacy for TD Ameritrade Institutional, said that advisers agree that that number is too low. “We're coming with an unusual message,” said Mr.... Read full post

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