Greetings! I hope that this finds you well and enjoying life.
Big news on Friday out of the White House is that President Trump has exercised his authority as president for possible changes regarding the Dodd Frank Act and the Department of Labor fiduciary rule. No actual changes yet, but Trump has instructed his administration to closely examine both of these to determine if they are in fact necessary and beneficial for America.
Dodd Frank is legislation that was enacted after the banking crises in 2008 and deals with regulations on financial institutions such as banks and brokerage houses. A big effect that Dodd Frank has had on banks is that it restricts the types of loans they do, the amount of loans and the amount of reserves that they have to maintain. The Trump administration wants to ease restrictions and conditions banks are subject to, in order to make it easier for them to lend money and hopefully stimulate the economy. A lot of pro-business advocates feel that Dodd Frank is too restrictive, stifles business and results in too much government regulation.
The Department of Labor creates rules and regulations for and monitors qualified retirement plans such as pensions, 401k, 403b, IRA’s etc. In the last year of the Obama administration the DOL was working to institute what is in a nutshell called a fiduciary standard for financial advisors (like myself), that give advice on qualified retirement plans such as mentioned above. The new rule would require that all advisors would be subject to a fiduciary standard in working with these types of accounts. Fiduciary means that the advisor maintains a standard where he holds his clients best interest first. One would think that would be something that occurred naturally. Currently advisors operating in a sales capacity aren’t required to do that. As a CFP (Certified Financial Planner) practitioner since 1992, I’ve always been required to operate under a fiduciary standard, so it’s no big deal to me what the DOL does. I have been and will always do everything that I can to operate in the best interest of clients.
FYI the reason there is opposition to the response by the Trump administration, the Chamber of Commerce and others; is that they maintain that small investors will suffer from a lack of advice, because a fiduciary standard and the requirements of such; will make it not profitable for advisors to want to work with them. Only time will tell how this will turn out. There’s been quite a bit of press about this in the last year and I wanted you to get my position on it. One thing for sure, it’s not business as usual in Washington these days.
If you have questions about the above, or feel like I can help in any way please call.
Jeff Christian CFP, CRPC