Not so fast.
Advisors who believe President Trump’s Administration will ease them from the burden of oncoming regulations may face an ugly surprise, according to the leaders of three professional advocacy organizations speaking in a panel discussion on Thursday at the 2017 TD Ameritrade National LINC conference in San Diego.
In moderating the panel, Skip Schweiss, TD Ameritrade Institutional managing director for advisor advocacy and industry affairs, noted that regulation is a rising concern among his firm’s RIA clients.
“Around 2009-2012, advisor’s No. 1 concern was a regulatory concern,” Schweiss said. “As we got further removed from the financial crisis, their regulatory concerns started to tail off -- until last year. At the end of 2016, that concern started ticking back up again.”
According to TD Ameritrade Institutional, 20 percent of its advisor clients named regulation as their No. 1 concern at the end of 2016, doubling the 10 percent who answered the same in 2015. Much of that concern stems from uncertainty surrounding the Trump administration’s intentions for financial regulation.
But one area that appears to have become more certain: the president is expected to sign an order today halting implementation of the DOL rule on April 1. The rule, which requires advisors to retirement plans to put the best interest of their clients first, would have likely brought fewer changes for RIAs than other advisors since most RIAs already act as fiduciaries to their clients.
Another area certainty is that a Department of Treasury initiative to push to have RIAs participate in anti-money laundering programs will move forward, said Karen Barr, president and CEO of the Investment Advisor Association.
“One of the interesting things starting out about anti-money laundering is that this is one of the few rules that has nothing partisan about it,” Barr said. “Our view is that what happens to this in the future is not at all changed by the change of administrations.”
The anti-money laundering rules would apply to all SEC-registered advisors, requiring them to file suspicious activity reports when they encounter red flags in client behavior, but advisors would be spared from more complicated and demanding regulations applied to broker-dealers and banks.
Business continuity plans may be another regulatory issue that proceeds during the Trump administration, according to Karen Nystrom, director of advocacy for the Financial Planning Association.
“I hope this is not a partisan issue either,” Nystrom said. “It’s not only a common sense practice to have, but it will also make your client feel more comfortable doing business with you.”
Accorrding to Nystrom, the SEC is taking comment on a proposed rule requiring firms to have business continuity plans to handle clients if an advisor should die, become incapacitated, or leave the business.
In TD Ameritrade’s recent Advisor Benchmark Study, just 16 percent of respondents said that they have a formal, documented continuity plan, with another 18 percent saying they have a plan in the works.
“Should this rule become final, if you do not have a plan in place, the SEC would consider that fraud,” said Schweiss.