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Donald Trump spotlight

Editor's Letter: December 2016

Trump or no Trump, the fiduciary tide has turned.

 When looking through the responses to our flash poll on advisors’ reactions to Donald Trump’s victory, I was humbled to find that I too, like much of the electorate and the politicians, held certain assumptions about groups of people that weren’t always grounded in reality.

About 300 advisors answered the flash poll, and a handful had a criticism of our questions that surprised me.

This is a flash poll, not a statistically rigorous research exercise. We see it as an amplification of our reporting. (Typically, most reporters in this space call a bunch of advisors and ask them the same questions. We do that too, but the poll helps us get a broader response. Many thanks to all the advisors that participate.)   

We wanted to get advisors’ opinions on what policy changes regarding the wealth management industry Donald Trump should prioritize; should it be to dismantle the Department of Labor’s fiduciary rule? Eliminate the tax loopholes for carried interest? Roll back Dodd-Frank regulations in part or in whole?

Advisors above all chose lowering taxes on small businesses as their top priority—a sensible option. A few went further and said they thought the poll was one-sided and biased. They asked why we thought any of the choices should be a priority. None of them, these critics contend, would improve the lot of financial advisors or the wealth management industry. Why could they not choose “implement all of Dodd-Frank” or “extend the fiduciary rule to all advisory accounts”? Good financial advisors, they say, have nothing to fear from the fiduciary standard. In fact, it will only help separate true advisors from the sales-oriented broker.

We based the choices as best we could on Trump’s actual policy proposals for financial regulation, as much as we could determine them from his campaign rhetoric and his platforms. Needless to say implementing all of Dodd-Frank or enhancing fiduciary standards across the industry was not among them. But the criticism tells me that not every advisor sees an advantage in eliminating regulations. My assumption had always been that the majority of advisors found regulatory structures more of a burden, and believed that the federal government has no knowledge of how business is conducted and no right to interfere in it. Consider the second top priority for advisors would be to eliminate the DOL’s fiduciary rule.

We look at the possibility on page 40. At this point, I think it’s anybody’s guess. But given the vocal criticism of our poll, the public’s growing awareness of the distinction in business models, as well as all the work that’s already been done by advisors and firms to adapt their practices to the standard, it may be the tide has turned on the fiduciary front regardless of what happens in Washington. It will be up to watchdogs inside the industry to ensure it doesn’t turn the other way.

David Armstrong


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