IBDs overwhelmingly say Trump should revoke fiduciary rule: survey

Nearly 90% of respondents to a Financial Services Institute survey indicate their support for repeal.
NOV 29, 2016
Registered representatives of independent broker-dealers overwhelmingly believe president-elect Donald Trump should revoke the Labor Department's fiduciary rule, according to a survey conducted by the Financial Services Institute Inc., a trade group representing IBDs. Eighty-six percent of survey respondents said Mr. Trump should revoke the regulation, which raises investment advice standards in retirement accounts such as 401(k)s and IRAs. FSI polled 1,357 independent financial advisers the week after the U.S. presidential election of Nov. 8. Seventy-one percent of respondents voted for Mr. Trump, the Republican candidate, while 19% voted for Democratic candidate Hillary Clinton and 10% either voted for a different candidate or didn't respond to the question. Stakeholders have speculated at length about the fate of the Department of Labor's fiduciary rule ever since Mr. Trump's victory and Republicans' retention of a majority in both houses of Congress. Analysts have forecast independent broker-dealers would be the worst-hit among those in the securities industry by the regulation. The rule begins a phased implementation period in April. The rule exposes IBDs and other firms to increased compliance costs and litigation risk for selling products on a commission basis, and makes sales of high-commission products such as variable annuities and non-traded real estate investment trusts more difficult. Proponents of the rule say that requiring brokers to act in their clients' best interests is necessary to prevent them from selling such high-fee investments that erode retirement savings. The consulting firm A.T. Kearney estimated independent broker-dealers would lose $4 billion in revenue over the next four years, or 22% of the industry's total, as a result of the regulation. The firm also expects IBDs to see a decline of $350 billion in client assets, or 11% of the industry's total. Trump adviser Anthony Scaramucci, managing partner of Skybridge Capital, said in October that a Trump administration would repeal the fiduciary rule, comparing the regulation to the Supreme Court's 19th-century Dred Scott decision, which held that African Americans were not U.S. citizens. Congressional Republicans also have been vocal critics of the fiduciary regulation since the final rule was promulgated in April. President Barack Obama, a champion of the regulation, in June vetoed a congressional resolution to kill it. The Financial Services Institute and other financial industry trade groups also have been outspoken against the rule. The Insured Retirement Institute, for example, which represents insurance companies, is a co-plaintiff in a lawsuit targeting the rule. Of course, despite the large number of independent broker-dealers calling for a repeal of the fiduciary rule, analysts have said the process of unwinding it won't be quick or simple. While the Labor Department has so far survived two legal challenges to the rule in district court, two are still outstanding.

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