Now that the dust has begun to settle after Tuesday’s midterm elections, when Republicans gained control of the Senate and expanded their majority in the House of Representatives, how will the new, redder Congress approach the issues that most affect advisors?

In the years following the Dodd-Frank Act, lawmakers have lined up behind various proposals to expand SEC oversight of investment advisors. They weighed in -- angrily, at times -- on initiatives underway at the commission and the Department of Labor to broaden fiduciary responsibilities for financial services professionals.

But those aren’t entirely partisan issues, and the shift in the balance of power in Congress isn’t likely to put any advisor legislation on the fast track, according to Duane Thompson, senior policy analyst at the fiduciary training firm fi360.

“Control of both houses by Republicans isn’t going to affect advisors that much, although certainly there will be more noise on Capitol Hill and numerous bills filed to chip away at Dodd-Frank,” Thompson says.

Thompson explains that the “noise” he anticipates will come in the form of more oversight hearings in the upper chamber. Regulators from the SEC, the Federal Reserve and other agencies could be hauled before the Senate Banking Committee, expected to be chaired by Richard Shelby (R-Ala.). In the past two congresses, Thompson notes that those oversight proceedings, where lawmakers can pointedly press regulators to abandon initiatives they find objectionable, were generally the province of the GOP-controlled House.

Lawmakers of both parties have been critical of a proposal at the Department of Labor to extend fiduciary responsibilities under a 1974 law to advisors working with retirement plans. One criticism: The department needs to better coordinate with the SEC, which has been mulling its own fiduciary proposal for advisors and broker-dealers. Officials from both organizations have insisted that they have been in close communication over their respective proposals, but some lawmakers remain skeptical, warning that potentially overlapping rules could create confusion.

To that end, last October the GOP-led House passed a bill on a largely party-line vote that would bar the Labor Department from moving ahead with its fiduciary rulemaking until the SEC completed its own work on a uniform standard. The Retail Investor Protection Act languished in the Senate, though that is the type of measure Thompson envisions the upper chamber, under new leadership in the next session, might consider.

The GOP will indeed have a clear majority in the Senate, though with two races still undecided, it remains to be seen just how large that advantage will be. Regardless of how those races break, however, Republicans won’t have enough votes to quash a Democratic filibuster or override a presidential veto, which could come into play if a slew of partisan legislation, such as the DoL fiduciary bill, ends up on President Obama’s desk.

“Even with action by the Senate, you will not see many structural changes to the securities or pension laws next year,” Thompson says. “That’s because we will soon be hearing more of another four-letter word, and it’s spelled V-E-T-O.”

Karen Barr, the new president and CEO of the Investment Adviser Association, is a tinge more optimistic that issues on the agenda of the RIA sector could move in the next session with support from both parties.

At the top of that list, Barr counts a House bill authored by California Democrat Maxine Waters that would authorize the SEC to collect fees from advisors to fund increased practice examinations, aiming to address what the resource-constrained commission acknowledges is a glaring shortfall in oversight.

“Having gained control of Congress, Republican leadership will be looking to show that they can get things done and improve operation of the federal government, and this presents us with an opportunity to gain Republican support for our user-fee bill in both chambers,” Barr writes in an email.

“We are hopeful that we can impress upon lawmakers on both sides of the aisle that it is the type of legislation that is sorely needed,” she adds. “It is sound bipartisan public policy that will make the SEC more effective, better protect investors and not cost the taxpayers a nickel.”

The IAA and other groups have been working to pile on more co-sponsors to that bill, and to produce companion legislation in the Senate.

That measure did win a prominent Republican endorsement earlier this year when Spencer Bachus (Ala.), the former chairman of the House Financial Services Committee, signed onto the measure as a co-sponsor. But Bachus is retiring, and any momentum he lent the user-fee legislation is unlikely to carry through to the next congress, according to fi360’s Thompson.

“Waters’ bill is unlikely to go anywhere, even though it is likely to be re-introduced next year,” Thompson says.

Aside from the customary theatrics of oversight hearings and the re-introduction of legislation that’s destined to stall, lawmakers in the next congress could renew efforts to overhaul the tax code, a priority for both parties, though disagreements on rates, revenue levels and funding mechanisms to offset any cuts are sharp. That issue, though it has proven next to impossible to achieve any broad, bipartisan agreement, is nonetheless one that advisors should keep an eye on as the next session unfolds.

“Advisors should closely watch any debate on tax policy, given the obvious implications for their clients,” Thompson says.

But the more immediate movement on advisor issues is likely to come from the executive branch, where the Department of Labor appears poised to repropose its fiduciary framework, which no doubt will touch off a heated debate over the relative merits and drawbacks of the proposal.

Knut Rostad, president of the Institute for the Fiduciary Standard, sees scant hope that a congress dominated by the GOP will work to promote stronger rules for advisors, or little else that Obama may want to advance on his agenda. In that context, Rostad urges the administration to rally behind what he sees as a needed investor protection, one that the Labor Department does not need congressional approval to implement.

“The GOP showing leaves the president with precious few options to advance his legacy,” Rostad says of Tuesday’s election. “[The] DoL rule-making is one place his bully pulpit and pen and phone could matter a lot.”

Then there is the matter of the SEC’s uniform fiduciary proposal, what Thompson calls a “wild card.” SEC Chairman Mary Jo White has spoken often of the investor confusion that can arise when financial professionals who might each describe themselves as an “advisor” but are held to different regulatory standards when offering advice to retail clients.

At the same time, there is clearly dissent within the commission about the value of such a rule, and it remains unclear whether White will push the proposal forward amid that division.

But advisors keeping tabs on Washington should expect the real movement in 2015 to come from the Labor Department and the SEC, rather than on Capitol Hill.

“Most of the substantive action will continue to take place in the regulatory agencies,” Thompson says. ”That’s where advisors should really focus their attention.”

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