Sitting in the audience at the ASPPA/DoL Speaks conference last week, I was reminded just how disruptive it can be to have a new boss.
The conference, which, IMHO, remains unique in both the quantity and quality of access to Labor Department exports, featured many panelists it has been my pleasure to meet and get to know over the past several years. However we practitioners may struggle from time to time with the regulations and interpretations these folks put together, you don’t have to spend much time with any of them to appreciate just how smart, hard-working, and dedicated they are.
Still, I can only imagine what it must have been like to have pressed (as they were surely pressed) to wrap up as much of the pending backlog of regulations in 2008. How it must have felt to see that last package—including the final regulations on investment advice—get all the way to the regulatory finish line, only to have it halted dead in its tracks (see White House Executive Order Snares Fee Disclosure, Advice Regs). And then, over a period of weeks/months, have that work rejiggered, perhaps significantly, “simply” because an election, based on factors that had nothing to do with these issues, brought in new leadership (see EBSA Sets Out Carrot, Stick Agenda).
Let’s face it, even in the private sector, managers and CEOs fall out of favor all the time and new ones are brought in, along with their new ideas (and sometimes their old friends). Advisers have seen plenty of that over these past 12 tumultuous months.
But for our industry, a few things seem obvious among those “new” priorities: a continued, and probably more insistent, emphasis on transparency in fees and revenue sharing; the rebuilding of walls between advice and compensation flows that could vary based on that counsel; and greater clarity in the targeting and positioning of target-date funds. But, frankly, while we may now achieve those aims in different ways, IMHO, it is at least arguable that we were already on those paths, or would have been shortly.
That said, there is a palpable sense that the new leadership will be less employer-friendly than its predecessors, though that need not mean unfriendly. They may be less willing to accept the rationalizations of those who protest that it is too hard, or too expensive, to provide meaningful information to plan fiduciaries; and, though it’s early yet, they seem more inclined to shield, rather than simply inform, participants. Time will tell.
Change, of course, is not only inevitable, it is frequently for the good. It is nearly always, however, “disruptive” as we shift and resift priorities and focus, certainly in the short-term. However, IMHO, if there’s a more disruptive force than change in our lives, it’s uncertainty.
And, for better or worse, I’m betting that this new Administration won’t leave us guessing for long.
—Nevin E. Adams, JD