Displaying items by tag: biden

(Washington)

In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version of the Fiduciary Rule go into effect. Almost everyone in wealth management thought Biden would surely use his administrations powers to stop the rule’s enactment, but they elected to let it go into effect as of this Tuesday, accompanying the announcement with positive and supportive language. The industry’s reaction was immediate and positive, while consumer advocates were disappointed as they were hoping for a more stringent rule from the Democratic administration.

FINSUM: Frankly, we take this as an incredibly positive sign for the wealth management business. This is a big signal to us that the Biden administration is not going to be as onerous and impractical on the regulatory front as many might have feared.

(Washington)

Biden has officially made his new SEC pick—Gary Gensler. And while the nomination has not gotten much press, what comes next may. Many fiduciary advocates and those on the left are making a big push for a change to Reg BI, and not just in terms of its actual content, but the name itself. “New suitability standard” is a name that has been floated for example. One industry lawyer, Brian Hamburger, put it this way, “Brokers, as they are registered as brokers, are representative of products; they derive their powers by way of a selling agreement between product manufacturers or investment products; and the dealer component, where they have an obligation to distribute that as appropriate to customers … That is a far cry from having to act in a client’s best interest”.

FINSUM: Most readers here are probably thinking “who cares what it is called”, but that is not the root of the matter. Rather, the name may be a symbolic first step of a major overhaul and the creation of a true fiduciary standard by the SEC.

(New York)

Despite all fears, markets had a fairly strong year in 2020. Why? See the full story on our partner Magnifi’s site.

(Washington)

Munis bonds have done well recently, but the ultra-low rate environment seems to have confused many about their relevance. It is critical to remember that despite yields being so low, munis still very much have a place in the environment. In fact, one could argue the current environment is better for munis than a more conventional one. The reason why is that munis still have a major spread advantage versus taxable equivalents. For example, while munis only yield an average of 0.86% right now, that translates to a taxable yield of 1.53% for those in the top income bracket. However, as we all know, Treasury yields are still much nearer to 1%, meaning munis current enjoy a major advantage over taxable bonds.

FINSUM: Given Biden and the Democrats’ support of state and local municipalities, and munis’ currently yield advantage, there is no reason for the asset class not to have a great year.

(Washington)

President Biden wasted no time in appointing a new Department of Labor chief. He has named Martin Walsh as Secretary of Labor. Walsh is currently the mayor of Boston and his history offers some insights into what his agenda may be. The Democrats have made very clear that one key component of their agenda is to undue the current DOL 2.0 rule and revamp it with a much stricter Obama era-like rule. That said, the naming of Walsh slightly complicates that picture. He was a union leader in Massachusetts and Biden has celebrated that Walsh is the first union member to lead the DOL in over half a century. Therefore, most think his immediate focus will be on workers’ rights issues and the gig economy rather than on wealth management.

FINSUM: It is hard to say how this will play out, but the naming of Walsh certainly makes it seem like a new rule may be slower in coming than some have feared.