(Washington)

One of the big questions financial advisors may have about the midterms has not been discussed much. That question is how the midterm outcome may affect regulation, specifically regarding the SEC rule or forthcoming fiduciary rule 2.0. The answer is that in the most likely scenario—Democrats taking the House and Republicans holding onto the Senate—regulations would get tougher for the wealth management industry. Staunch fiduciary advocate Rep Maxine Waters (D-Calif.) would become the chair of the House Financial Services Committee, and would likely push for much tougher regulation. She has already railed against the new SEC rule for what she sees as a lack of strength.

FINSUM: Democrats taking the house could change the regulatory picture considerably. This seems likely to be one of the biggest risks to a Democrat victory for advisors.