Trump Understands and Has Opinion on DOL Fiduciary Rule—Aide
Kellyanne Conway, who helped steer Donald Trump’s dark-horse presidential campaign to victory, said on Tuesday that the president-elect has an opinion on the Department of Labor’s fiduciary rule that does not necessarily gibe with the oppositional view of one of his top financial industry advisers.
Hedge fund-of-fund manager Anthony Scaramucci has Trump’s ear as one of 16 people on the president-elect’s transition team executive committee, Conway said on the sidelines of a conference for registered investment advisers, but that does not mean he accepts Scaramucci’s extreme criticism of the rule.
“He believes what he believes,” she said of Trump’s view, adding that she knows what it is but declining to elaborate.
Her shrouding of Trump’s opinion did little to clarify the fate of the fiduciary rule, initially opposed by most conventional brokerage firms because it permits customers to bring class-action lawsuits as an enforcement tool instead of being restricted to arbitration.
Scaramucci, founder of SkyBridge Capital, has been extreme in his criticism of the fiduciary rule and has publicly said that the Trump administration will dilute, if not repeal, it.
The rule, which takes effect on April 10 for retirement accounts and requires financial advisers and brokers to put their customers’ interests ahead of their own, deprives advisors and customers of choice, disenfranchises middle-class investors and is an intrusion of government into the private sector, he has said.
Conway, who in August became Trump’s third campaign manager, filled in as a keynote speaker for Scaramucci at The MarketCounsel consulting and law firm group’s annual summit in Miami Beach. Scaramucci and Trump chief-of-staff Reince Priebus canceled due to a “mandatory” transition staff meeting called by the President-elect, said MarketCounsel founder Brian Hamburger, a University of Florida Law School classmate of Priebus.
The fate of the fiduciary rule was a major subject of conversation at the conference’s opening day. In an informal poll that MarkeCounsel took of attendees, a strong majority said they expect delays in its implementation and significant changes.
Luis Aguilar, a former member of the Securities and Exchange Commission who also addressed the conference, views the fiduciary rule as a major advance for consumer protection but agrees that the Trump administration may dilute it.
“My money’s on it going away but it’s not that easy,” he said on the conference sidelines after telling attendees that rolling it back through executive order is very complex.
Skip Schweiss, head of TD Ameritrade’s retirement plan business for financial advisors, said a delay is likely and would probably be followed by modified rule-making. However, he said with only 80 days between Inauguration Day and the rule’s implementation date it is hard to predict what will happen.
Regardless of what happens, policies companies have unveiled to comply with the rule are unlikely to be rolled back because they have already made large investments, economically and strategically, in preparation for the rule.
Merrill Lynch is ending commission-based retirement accounts to avoid tempting brokers to sell inappropriately high-commision products and convert them to fee-based accounts. It has widely marketed what it says is a “customer-first” approach in advertisements and video campaigns.
“Merrill put such a stake in the ground with their announcement,” Schweiss said. “I don’t see how they can walk that back.”
To ensure that buy-and-hold customers do not pay higher fees than they do currently with transactional accounts, some firms also have said they will exclude certain long-held investments in a client’s account from the assets on which fees are calculated.