US: From Wall Street to Wisconsin, brokers cheer Donald Trump’s order

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Washington | Published: February 4, 2017 5:17:18 AM

With a swipe of his pen, U.S. President Donald Trump on Friday started killing off a retirement advice rule that wealth managers from Wall Street to Wisconsin have spent the last six years lobbying against.

 Donald Trump signs an executive order rolling back regulations from the 2010 Dodd-Frank law. (Reuters)Donald Trump signs an executive order rolling back regulations from the 2010 Dodd-Frank law. (Reuters)

With a swipe of his pen, U.S. President Donald Trump on Friday started killing off a retirement advice rule that wealth managers from Wall Street to Wisconsin have spent the last six years lobbying against.

A landmark policy from the Obama era, the so-called fiduciary rule requires brokers and financial advisers to act in the best interest of retirement savers. This restricts their ability to earn commissions and to sell some higher-fee products.

Wall Street has argued it would harm consumers because it would raise compliance costs and therefore fees, and force them to get rid of Main Street clients and small businesses that offer 401(k) plans.

Trump’s executive order asks the Labor Department to review whether the rule needs to be changed or dumped.

Both supporters and opponents are girding to argue their case. But the industry has the edge, with Trump officials stating they were planning on rolling back regulation generally and criticizing the fiduciary rule in particular.

The Chamber of Commerce, one of a number of trade groups which have filed lawsuits to kill the rule, cheered Trump’s order.

“We look forward to swift action from the Department of Labor in putting this delay into effect and reevaluating matters of policy and law,” the Chamber said in a statement.

Shares of banks with large wealth management divisions jumped on Friday with Bank of America (BAC.N) up 2.5 percent, Morgan Stanley (MS.N) 5.5 percent stronger and Wells Fargo (WFC.N) over 2 percent higher.

Insurers, whose sales of annuity products were at risk from the rule, also rose, with shares of Prudential (PRU.N) up 1.9 percent and Metlife (MET.N) 1 percent stronger.

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“Everyone will be pleased that DOL’s rush to get it done before the administration change is set back,” said Judi Carsrud, director of government relations for the National Association of Insurance Financial Advisors (NAIFA), which has been fighting the rule for years.

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