Trump adviser Anthony Scaramucci, who runs the $12.4bn (£10.1bn, €11.1bn) SkyBridge Capital hedge fund firm, said on Thursday that the incoming administration should dismantle the adviser reforms intended to put an end to hidden fees and conflicts of interest in the investment market.
“We’ve got to get rid of this,” he told The Financial Times.
Scaramucci said last month that if Trump is elected, he would repeal the fiduciary standard, describing the rule as the “dumbest decision to come out of the US government in the last 50 to 60 years.”
He accused the regulation of being “unfair” as it would divert too much money from mutual funds into low-cost passive ETFs and index funds.
Several industry groups such as the National Association for Fixed Annuities (Nafa) have launched legal challenges, although a US judge threw out the insurance body’s first appeal earlier this week.
The US Department of Labor issued its first set of guidelines on the fiduciary rule at the end of October, widely-acknowledged as the US equivalent to the UK’s Retail Distribution Review (RDR).
Scrapping the reforms would be welcomed by many asset managers, brokers, life insurers and other financial service providers as it threatens the provision of some of the industry’s most lucrative products.
The regulation will have the biggest impact on brokers, who currently must sell investment products that are suitable for their clients, a less-stringent standard than the fiduciary requirement whereas investment advisers already adhere to a best-interest standard.
Unclear stance
However, Knut Rostad of the Institute for the Fiduciary Standard, said it is unclear where Trump stands on the Labor Department’s conflict of interest reforms.
“President-elect Trump is part libertarian, part tea party conservative and part cultural liberal,” Rostad told International Adviser.
“The election of Donald Trump is widely interpreted to mean the finance industry will get a new wave of deregulation that will sweep away the DOL fiduciary rule. Yet, the record suggests it’s not clear.”
Meanwhile other commentators have pointed out that repealing the leglislation is unlikely to be at the top of Trump’s to-do list for his first 100 days in office.
However, a move to delay it wouldn’t be dissimilar to actions president Barack Obama made when he took office in 2009, when he froze a Bush-era investment advice rule before it took effect.
