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A good friend of mine told me the other day that at the rate he is churning out executive orders, Donald Trump could be done with his work as president by the end of March and then turn over the keys to Mike Pence and return to Trump Tower to preside as king. While that might make many of his detractors happy, Mr. Trump appears to be enjoying turning the political world on its head too much to fade away so quickly. The pace he is setting of overturning laws and regulations that are suffocating economic growth and enthroning mindless political correctness is breathtaking. A politician who is actually doing what he promised – imagine that!
One of the areas in which Mr. Trump is keeping his promises is financial services, where he signed executive orders last week delaying the idiotic fiduciary rule cooked up by Barack Obama's socialist Labor Department and vowing to undo many of the Dodd-Frank rules that do little to protect investors while saddling financial firms with mindless and useless regulations.
Naturally, the mainstream financial media is in paroxysms over Mr. Trump's latest executive orders, churning out incendiary headlines like "What Trump Could Do to Your Retirement", "Three Ways to Protect Your 401(k) If Trump Kills the Fiduciary Rule" and "Donald Trump Just Made It Way Easier for Your Financial Adviser to Rip You Off". What this all really means is "How dare Donald Trump upset the status quo?"
Of course, this is another progressive meltdown. The fiduciary rule is a bad idea that deserves to be dead and buried.
Trump Is Slashing Useless Regulations, Not Ripping Off the Little Guy
The fiduciary rule was a particularly egregious example of the government infantilizing investors. Ignoring the fact that any broker worth his salt is supposed to be acting as fiduciaries for his clients and can be sued if he violates that trust, the fiduciary rule redundantly holds brokers and financial advisers who work with tax-free clients (i.e., IRAs, 401(k)s) to a fiduciary standard as opposed to the looser suitability standard. A fiduciary standard requires a person to always act in the best interests of his client and to always prioritize his client's interests. This is what ethical brokers and advisers are supposed to do already and they can get in big trouble if they don't. The suitability standard simply requires all investments to be suitable for the client, a lower standard.
The fiduciary standard is allegedly stricter than the suitability standard by requiring advisers to do what they are already supposed to do and work in the best interest of clients by avoiding conflicts of interest that arise when they recommend products offered by their firms that charge higher fees than other products. But the rule merely added a redundant layer of regulation that raised costs for financial firms, did nothing to protect investors, and allowed pr…
About the Author
Prominent money manager. Has built top-ranked credit and hedge funds, managed billions for institutional and high-net-worth clients. 29-year career.