FundFire
November 9, 2016

Richard Dukas Comments on Investor Sentiment in Aftermath of Trump Victory

Trump Win Unlikely to Stop Momentum Behind DOL Rule

 

Trump took the election after standing only a 15% chance of winning against Clinton, an election forecast by The New York Times showed, as of Tuesday morning. That day, PIMCO’s head of public policy Libby Cantrill also pegged Clinton’s win at a 70 to 75% likelihood, Cantrill told CNBC.

Ahead of the decision, a poll of the investment industry revealed that only 18% of senior professionals felt that Trump was the candidate whose policies would be most beneficial for growth prospects in the U.S. (as opposed to 43% who voted for Clinton), according to a survey conducted by Dukas Linden Public Relations (DLPR) and MHP Communications.

In total, 70 senior figures in the investment industry, across the U.S., U.K., Europe and Asia, participated in the pre-election snap poll prior to October 28.

“The question was who they wanted as the president and who would be most beneficial for the investment community,” Richard Dukas, DLPR’s CEO explains. “They wanted Clinton because of the stability factor. [She’s] a known entity, someone who understands how to govern and how to get legislation passed.”

While it’s hard to speculate how a presidency under either candidate would impact the investment community, firms have already “been running hard down a path to make sure they make the business adjustments they need to make [for the fiduciary rule] – which, as far as they are concerned, will be implemented five months from now,” Tim Barron, CIO at Segal Rogerscasey said on Tuesday, prior to the election results.

A fair amount of resources have also been spent on such efforts, in advance of the rule’s effective date, Barron adds.

“They are certainly behaving as if it’s going to be in effect. [And even with Trump elected], are they going to want to backtrack on that? I’m not sure,” he says.

Despite Donald Trump’s surprise presidential win, his plans to kill the Department of Labor’s fiduciary rule aren’t likely to cause investment firms to deviate from months of planning ahead of the landmark rule, experts say.

Last month, Trump advisor Anthony Scaramucci, who heads the $12.4 billion hedge fund shop SkyBridge Capital, reportedly said that, if elected, the presidential hopeful aimed to repeal the rule, which he called “the dumbest decision to come out of the U.S. government in the last 50 to 60 years.”

And while the key legislation may face even more resistance before becoming effective in April 2017 under Trump, wealth and asset management firms are still operating under the assumption that the rule will move forward as planned.

The fiduciary rule, which introduces new requirements for parties working with ERISA-covered retirement plans and IRAs, as reported, expands the definition of fiduciary advice. Last week, the rule endured a challenge from an industry group, the National Association for Fixed Annuities (NAFA), which filed a lawsuit claiming that the DOL overstepped its authority with its creation of the rule, as reported by the Wall Street Journal. On Friday, U.S. District Court Judge Randolph Moss denied NAFA’s request to place the landmark rule’s enactment on hold.

By Danielle Walker
Originally published by FundFire