While the Republican presidential candidates have focused on tax reform, the Democratic candidates have united behind the theme of reforming Wall Street. (Our look at the Democrats' positions on tax reform is here.) It is no surprise, then, that DOL’s fiduciary rule — which would require brokers and financial advisers who advise on retirement savings to act in the “best interest” of retirement savers as ERISA fiduciaries — has become an issue in the campaign.
Each of the three Democratic candidates supports the fiduciary rule as currently proposed. Former Secretary of State Hillary Clinton stated that “billions [of dollars] are drained from retirement accounts because of high fees and conflicts of interest in the investment management industry.” In a New York Times op-ed, “How I’d Rein in Wall Street,” she called the fiduciary rule a “common-sense effort to prevent conflicts of interest by financial managers.”
Former Maryland Gov. Martin O’Malley lists “fully implement[ing the] fiduciary rule” on his campaign website as a policy goal. And Sen. Bernie Sanders (I-Vt.) announced his support in early October through an email to Mother Jones magazine.
For the most part, the Republican candidates have not taken formal positions on the fiduciary rule. However, former Florida Gov. Jeb Bush wrote in a Wall Street Journal opinion that he would “stop the Obama Administration’s proposed regulations to limit consumers’ choice of financial advisors and drive up the costs of private saving.”
Other candidates have castigated the Obama administration for the proliferation of regulations and spoken more generally about the need to reduce regulatory burden. In stump speeches, Donald Trump routinely states that existing “regulations are just destroying us.” Based on the Republican candidates’ hostile views on government regulation, it is likely that each would oppose the fiduciary rule, certainly in its current form.
As the field of 2016 contenders is winnowed down, we will continue to monitor each candidate’s policy visions as they relate to the retirement industry. On the Democratic side, Clinton is the clear front-runner, and we are closely tracking her policy announcements. On the Republican side, the race is currently much less clear, with Trump and Cruz leading in recent polls. Whatever the outcome of the primaries and the general election, we expect retirement issues to be front and center in the national debate.
Michael P. Kreps is a principal at Groom Law Group, where he counsels employers, plan sponsors, financial institutions, trade associations and coalitions on retirement, health, tax and employment matters. Previously, he served as the Senior Pensions and Employment Counsel for the U.S. Senate Committee on Health, Education, Labor, and Pensions from the 110th through the 114th Congresses.
Kevin L. Walsh is an associate in the Title I group at Groom Law Group. He previously worked in the U.S. House of Representatives, first with the Committee on Financial Services and later as a legislative assistant for the late Rep. Michael Oxley (R-Ohio). He also served a law clerk for Judge D. Michael Fisher of the U.S. Court of Appeals for the Third Circuit.
