new retirement rules set to take effect next year now are in jeopardy after donald trump <u+2019>s upset presidential election win , leaving wall street unsure on how to proceed with implementation. analysts and industry observers wondered wednesday if mr. trump, who during his campaign called for a temporary moratorium on all new regulations from federal agencies, would follow through on his pledge to halt or dismantle the labor department<u+2019>s <u+201c>fiduciary rule.<u+201d> <u+201c>the long-term viability of the regulations is at least once again in play,<u+201d> said andrew oringer, co-chairman of law firm dechert llp<u+2019>s retirement-income security and executive-compensation group in new york. <u+201c>you really have to wonder whether the new fiduciary regulations will survive this historic election.<u+201d> brokerages and asset managers had been bracing themselves for the rule, which aims to eliminate conflicts and ensure that brokers put the interests of retirement savers first. the rule brings a host of changes with it, including the elimination of compensation incentives for brokers and changing how investors pay for retirement advice, among others. altogether, the rule was going to affect about $3 trillion of retirement assets in the u.s., according to research firm morningstar inc. wall street firms affected by the rule saw big gains in their stocks on wednesday, suggesting that mr. trump<u+2019>s deregulation push may bode well for those companies. bank of america corp. , which owns brokerage merrill lynch, rose 5.7%, while morgan stanley gained 7.1%. wells fargo & co., with its wells fargo advisors unit, increased 5.4%. waddell & reed financial inc., one of the asset-management firms expected to be hardest hit by the new regulations, surged 15%. franklin resources inc. advanced 12%. <u+201c>any financial stock is trading on the possibility that regulation will get pulled back,<u+201d> said kyle sanders, an analyst at edward jones. the rule<u+2019>s dismantling would be a blow to president barack obama. the obama administration has said conflicted advice costs american families $17 billion a year and pushes down annual returns on retirement savings by a percentage point. financial-industry leaders have said those figures are inflated and have fought against the regulation. some brokerages, such as merrill lynch, have defended the rule<u+2019>s intent to hold brokers to a higher standard. the rule is set to take effect in april, but with the implementation date set several months into mr. trump<u+2019>s presidency, some observers said it could be put into limbo. <u+201c>that<u+2019>s one of the reasons the labor department was so driven to have the regulations finalized before the election,<u+201d> mr. oringer said. <u+201c>we are moving forward with implementation as planned,<u+201d> a labor department spokesman said. a move to slow implementation wouldn<u+2019>t be dissimilar to actions president obama made when he took office in 2009, mr. oringer said, when he froze a number of regulatory efforts that hadn<u+2019>t yet been implemented. <u+201c>it is extremely likely the dol fiduciary rule will not go into effect as planned in april 2017,<u+201d> said edward mills, a policy analyst at investment bank fbr capital markets. mr. mills said mr. trump would most likely delay or block the rule through legislation, <u+201c>most likely through a rider to an appropriations bill.<u+201d> mr. trump hasn<u+2019>t directly addressed the rule during his campaign. but a top adviser to the republican, hedge-fund investor anthony scaramucci, who manages skybridge capital, said at an industry conference last month that mr. trump should repeal the rule . mr. trump<u+2019>s campaign and mr. scaramucci didn<u+2019>t immediately comment on the regulation<u+2019>s future. house republicans also threaten the rule. led by house speaker paul ryan, republicans have said it the rule is too complex and costly and would deprive small retirement savers of advice. investor watchdog barbara roper says it is likely that a republican-led congress will <u+201c>try to make good on its threat to repeal the rule.<u+201d> if mr. trump<u+2019>s administration or house republicans kill the fiduciary rule, the transition under way to fee-based advice from commission-based compensation will slow markedly, with the horizon stretching out another decade or two, added benjamin edwards, a law professor at barry university in miami. the labor department<u+2019>s rule has already been roiling the retirement-advice landscape and would further complicate how brokerages proceed. merrill lynch announced it would make a wholesale exit from the brokerage industry<u+2019>s traditional sales model of charging commissions to retirement savers, deciding to only offer retirement advice in accounts that charge a fee based on a percentage of assets. others, such as morgan stanley, raymond james financial inc. and lpl financial holdings inc. said they would continue to offer commission-based iras , although with some changes, such as signing a contract that says brokers will put retirement savers first and a slimmer menu of investment products . all the brokerages have already spent millions of dollars to comply with the rule and planned to continue spending ahead of april. <u+201c>all the big firms will probably take a big, deep breath today and say we need to pause this,<u+201d> said david armstrong, president at monument wealth management in virginia. industry trade group securities industry and financial markets association, which is challenging the regulation in a lawsuit, says the labor department should now <u+201c>re-evaluate<u+201d> the rule<u+2019>s impact on brokerages and investors. the <u+201c>fiduciary rule is burdensome with clear negative consequences for clients and firms,<u+201d> said lisa bleier, managing director and associate general counsel at sifma, which represents firms across the financial industry. <u+201c>those consequences are becoming increasingly more apparent as firms work to comply with the rule ahead of its applicable date.<u+201d> financial-services executives weren<u+2019>t prepared to signal how mr. trump<u+2019>s win will affect their plans to comply with the regulation, however they planned to watch that means for now, firms are assuming the rule will remain in place. <u+201c>as an organization, we are going to assume the rule remains intact. like everyone else, we are taking steps to comply,<u+201d> says ed murphy, president of empower retirement, the country<u+2019>s second largest 401(k) recordkeeper ms. roper, however, said two matters could save the regulation from an emboldened republican-led congress. <u+201c>determined opposition from senate democrats,<u+201d> said ms. roper, director of investor protection at the consumer federation of america, <u+201c>or a genuine commitment on the part of president trump to make the government work for average americans instead of special interests.<u+201d> <u+2014>sarah krouse and anne tergesen contributed to this article. write to michael wursthorn at michael.wursthorn@wsj.com and lisa beilfuss at lisa.beilfuss@wsj.com corrections & amplifications: anthony scaramucci manages skybridge capital, a firm that invests in hedge funds. an earlier version of this article incorrectly called skybridge a hedge-fund firm. (nov. 11, 2016)
donald trump victory casts clouds over fiduciary rule  - wsj
lisa beilfuss