Displaying items by tag: SEC

According to the leading regulatory lawyers in our industry, advisors are about to get hit with a doozy. Faegre Drinker Biddle & Reath say that the DOL is planning to release a new fiduciary rule this spring. Since the new version of the rule is being drafted and put forth under the Biden DOL, it is widely agreed that this newest version will look much like the Obama-era rule that got thrown out by the courts. According to Fred Reish, a partner at the firm, “There will be provisions of 2020-02 that'll be moved over to it. Probably the fiduciary acknowledgement, the best interest standard and maybe specific disclosures of reasonable compensation limitation. It'll look a lot more like a fiduciary type rule than it does right now."

FINSUM: This new rule has been widely signaled but we have never had a good fix on timing, but is now becoming clear. Take note.

Congress continues to look for ways to fund the $1.85 trillion bill that aims to spend on social and climate policy. While they have already considered objectives that would align the U.S. with the G20’s global minimum tax rate, the current bill will also affect wealthier individuals’ retirement vehicles. Congress will put limits on large accounts for individuals or couples with $10 million dollar retirement balances. The newest Build Back Better bill also eliminates the ‘backdoor’ Roth IRA by minimizing rollovers and conversions. The date for the former rule change isn’t until Dec. 31, 2028 but the backdoor loophole is set to close Dec. 31st of this year in the current bill.

FINSUM: Substantial changes to savings and retirement could be coming in the upcoming legislation, and investors should be aware of how these changes could affect their retirement vehicles.

The Trump administration put rules in place which forbid employers from considering social or environmental impact when it came to fund selection from enrolling in retirement plans. However, the Biden admin is turning a new leaf on this front as they have proposed a rule which will ease the decision-making process for employers if they want to add ESG funds to their employees’ retirement plans. This is yet another proposal from the Biden admin that favors renewables and green corporations in the country's transition to net zero emissions. Part of the response is a boost in demand as investors have overwhelming interest in ESG in their portfolios. It isn’t a no brainer that ESG should be a part of a retirement portfolio, as it does prepare for downside risk, but it may not outperform.

FINSUM: The U.S. 401(k) savings machine is a huge pool of investment, and institutional savings could be a major boost to ESG demand.

The DOL took a very important and surprising step today. Many advisors and the industry more generally has been calling for the DOL to delay their implementation of the Fiduciary Rule, and somewhat amazingly, that is exactly what the agency just did. Referring specifically to the rule that was passed in the final few weeks of the Trump administration, the DOL is delaying implementation until the end of January 2022. Further, it will not enforce several parts of the rule, including the rollover aspect, until June 2022.

FINSUM: So the month extension isn’t that big, but will give some firms more time to get their matters in order. The bigger question is when the new Biden era DOL rule be implemented.

Former Harvard bankruptcy professor Elizabeth Warren is trying to reestablish support of tighter regulation on yet another financial industry sector. Looking to alleviate financial irresponsibility, the bill restricts PE from enforcing new loans on companies in order to withdraw dividends. Additionally, the bill creates a number of protections for workers that prohibit outsourcing and secure severance pay in the event of bankruptcy. Companies like Sports Authority, Shopco, and Gymboree all filed for bankruptcy under PE the debt Warren is trying to prohibit. Warren failed to draw the appeal across the aisle previously with the bill, but is hoping to gain more traction this time around. Opponents say the bill will draw down on private funding for new and small businesses and could harm the ability to make new hires or expand their workforce.

FINSUM: Regulation like this will undoubtedly harm some small businesses but the protection and benefits could out way those restrictions, however the bill won’t likely get enough traction in its current status to reach the oval office.