Fresh off a victory in securing an 18-month delay for the fiduciary rule's remaining provisions, the regulation's opponents are redoubling efforts to nix it for good.
"I've been at this for five years now," Rep. Ann Wagner (R-Mo.), a critic of the rule, said Thursday at a U.S. Chamber of Commerce event in Washington. "I believe we will get there and I believe we have the administration's support."
Rescinding the rule in its entirety, however, has proven difficult in part because of the slowness of the rule-making process and the support the rule enjoys among consumer advocates as well as many within the industry.
Wagner outlined three scenarios in which she said the regulation could be overturned: the SEC could initiate its own rule-making process; the courts could side with plaintiffs in one of several pending lawsuits; or Congress could pass a bill Wagner intends to put forward and which she says would kill the fiduciary rule.
Each scenario might not come to past for various reasons. The SEC has been authorized to craft a fiduciary standard since 2010, but has long put off doing so in part because commissioners have not agreed on an approach. Indeed, regulatory rule-making can take years; the Department of Labor took six years to craft the current fiduciary rule.
Meanwhile, several lawsuits filed against the agency's rule have failed.
And congressional action might not be so easily forthcoming, according to Rep. Phil Roe (R-Tenn.) said that.
"To be perfectly honest, when you've got a debt ceiling coming out, a hurricane barreling down on us, tax reform, this CR we're going to pass … there's only so many things you can focus on," said Roe, another critic of the rule who also spoke at the chamber event.
Democratic senators would also likely move to block any legislation that overturned the fiduciary rule.
For his part, Roe lamented what he says is efforts to demonize advisors by political supporters of the fiduciary rule. "In this town, the way you build public sentiment is not by the truth, it's by public perception," he said.
'WE HAVE TO GET RID OF IT'
Efforts to overturn the rule face additional roadblocks.
Should the Department of Labor, which is reviewing the regulation as ordered by President Trump in February, try to rescind the rule it could be faced fresh lawsuits from fiduciary supporters, predicts Micah Hauptmann, Financial Services Counsel at Consumer Federation of America, which favors the rule.
"It looks like most of the industry rule opponents want to water down the rule, not completely eliminate it. They clearly want to continue to advertise like they’re acting in customers’ best interest without actually having to do so," says Hauptmann.
The rule's supporters, meanwhile, have been rallying to save what they see as a necessary investor protection.
On Wednesday, Sen. Elizabeth Warren (D.-Mass.) urged Labor Secretary Alexander Acosta in a letter to implement the regulation posthaste, citing statements made by wealth management CEOs during earnings calls.
"Contrary to the alarmist claims of their lobbyists and the conclusions of opaque industry-funded studies, the earnings calls reviewed by my staff suggest that financial firms are fully prepared to comply with the rule, have introduced products and other changes that will improve the services they offer clients, and have a positive outlook on the rule's impact to their businesses and to their clients," Warren wrote.
Indeed, firms have been forging ahead with changes, introducing new investment products to their platforms and removing those that were deemed to pose conflicts of interest.
Dan Levine, who leads the location strategies practice at Oxford Economics, expects that this would likely ripple out to other parts of the business.
"This is not something limited to retirement accounts. It will spill over to other accounts," Levine said during a panel at the Chamber of Commerce event.
Implementing the fiduciary rule has already proved costly. A SIFMA survey of 21 of its member firms revealed that they've spent approximately $600 million to get in compliance with the regulation. SIFMA, with the U.S. Chamber of Commerce and other industry trade groups, sued the Labor Department last year to block the rule from going into effect.
"The [DoL] standard doesn't have any enforcement teeth because it got kicked back. Thank God," Wagner said. "It would have been a boon for trial attorneys. I'm glad it's got no teeth, but we have to get rid of it."
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