Sure, the delay of the DOL's fiduciary rule is big news. But there are other important matters going on in Washington.
Although the epic battle over the Department of Labor's fiduciary rule will continue for at least several more months, if not years, and dominate the regulatory agenda for investment advice, other critical issues are bubbling to the surface. Several may even have a chance of advancing in this cold political climate, as industry groups, consumer advocates and regulators sound a note of consensus on areas such as reforming adviser titles, cracking down on elder financial abuse and protecting retirement tax incentives, according to a panel of experts assembled by InvestmentNews.
The Regulatory Roundtable, which occurred just days before the April 10 implementation date of the DOL fiduciary rule was officially delayed, focused initially on that regulation and how the disagreement over it illustrates the widening chasm between Republicans and Democrats.
"This difference I've seen that predates President [Donald J.] Trump is this hyperpartisanship now on issues related to investor protection, retirement security, issues that we just don't think are partisan issues," Maureen Thompson, vice president for public policy at the Certified Financial Planner Board of Standards Inc., said at the event, held at the National Press Club in Washington.
The Consumer Federation of America has been a stalwart supporter of the DOL rule, which advocates say will protect investors from conflicted advice that leads to sales of high-fee products that erode retirement savings. But its defense of the measure has drawn only Democratic support.
"Unfortunately, all Republicans have been quite antagonistic to the fiduciary rule, and it has become a partisan issue," said Micah Hauptman, financial services counsel at the Consumer Federation of America.
But Ira Hammerman, executive vice president and general counsel at the Securities Industry and Financial Markets Association, said there are Democratic senators who agree with his group that the DOL rule is flawed.
"We would look to them to continue to be supportive of finding an appropriate solution and an appropriate way forward on this very important issue," he said.
When Mr. Hammerman said SIFMA supports a standard of acting in a client's best interests, he drew criticism from Mr. Hauptman, who said that "it's really best-interest in name only."
Mr. Hammerman responded: "This DOL rule is not all chocolate and roses. This rule actually hurts the people that the DOL is trying to help." POLITICS GET IN THE WAY
Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors, said politics could be causing more of a divide than actually exists. "When I would talk to different lawmakers, they would say, 'I'm with you and I'll write a letter, but at the end of the day, I can't afford to oppose the president because I have to go up for re-election, and he has made this his top priority,'" he said.
These exchanges encapsulate the ongoing debate, as DOL reviews — and possibly modifies or repeals — the rule, as directed by Mr. Trump.
"It's like you go back in time a year and a half, and everyone will be weighing in again with a lot of letters," Mr. Mayeux said. The process will be jarring, said David Tittsworth, counsel at Ropes & Gray.
"It ain't pretty at all," Mr. Tittsworth said. "To call this inartful rulemaking would be a gross exaggeration. It's ugly. You're going to see this thing delayed several [times] before you get to the end of the rainbow."
But there are other issues on the horizon where more of a consensus could be reached, according to the group of nine analysts and officials from adviser and consumer organizations. Five of the biggest are detailed here.
TAX REFORM
Another big issue Washington will try to tackle this year also has repercussions for financial advisers and their clients: comprehensive tax reform.
It's unclear where the Trump administration and Congress are headed with legislation, but if they want to reduce tax rates across the board, as both sides have said, they will have to come up with revenue to pay for it if they don't want the federal deficit to grow.
One of the so-called "pay-fors" that is often mentioned is curbing tax deferrals for retirement savings, the tax breaks provided for contributions to 401(k)s and individual retirement accounts.
"If there is truly a bipartisan issue in Congress, it is that America is undersaved," said Cathy Weatherford, president and CEO of the Insured Retirement Institute. "So I think that, end of day, we all have a lot of shoe leather to wear down on the Hill to make sure that balancing our federal budget and taking care of our issues with regard to tax is not done on the backs of American savers."
ADVISER TITLES