Since FSI’s founding two decades ago, we have pursued constructive engagement as the best way to get results. Indeed, whether we’re talking to the White House or a state legislator’s aide, respectful and thoughtful dialogue is the key to securing outcomes that benefit our members, the Main Street investors they serve and the broader independent financial services industry.
This helps to explain why we don’t take sides in elections. We are willing to – and, in fact, must – work with all policymakers who make it easier for our members to deliver financial advice to their clients.
In the wake of the presidential election, it’s tempting to think it may not matter how we approach advocacy because the incoming administration will take a sympathetic view of the industry – so much so that our biggest worries could fade away. That’s unlikely to happen.
Clearly, the election creates significant opportunities to advance our important priorities. However, serious threats remain, and we must be prepared to fight against them.
DOL Court Cases
For instance, our two court cases, which could have sweeping implications for the industry, are still pending.
One is a lawsuit we joined challenging the latest version of the Department of Labor’s (DOL) fiduciary rule. A U.S. district court issued a stay in the case during the summer, but the DOL appealed that decision to a federal appeals court, which has yet to rule. There’s no way of knowing when a decision will come, and it could take months for the entire process to play out.
The other suit came after the release of a final independent contractor rule at the start of 2024. In response, we sued the DOL in U.S. district court, arguing, among other things, that the rule is arbitrary and capricious under the Administrative Procedure Act.
In both cases, the incoming Labor Department is unlikely to appeal were the courts to rule in our favor. Even so, given the importance of both these issues, we must continue to march forward.
Notably, it will take time for the new administration to get its nominees through the Senate and for DOL staff to sift through open cases and its priorities. Moreover, our cases can be a powerful foundation to engage and educate the DOL about the impact their rules can have on Main Street Americans.
SEC Enforcement
Also, regulation by enforcement remains a huge concern. We are confident that the new SEC leadership will be good news for the industry, which has dealt with a deluge of rule proposals and was subject to heavy fines under Gary Gensler. Still, we are prepared to engage the commission to ensure enforcement is focused on protecting investors and rulemaking is transparent and forward-looking.
Regulation by enforcement remains a huge concern.
Recent Supreme Court decisions that increased judicial scrutiny of agency rulemaking only serve to make our concerns about regulation by enforcement more acute. Indeed, the agency’s enforcement mechanism can become a tempting tool to “regulate” regardless of who leads the agency. That’s why we will remain vigilant and closely monitor enforcement actions not predicated on well-established rules.
Capitol Hill Dynamics
Finally, there are unique dynamics on Capitol Hill to consider. When opposing parties control different branches of government, robust debate is the norm. That can lead to gridlock. But it also often produces substantive discussion about policy, including whether some rules should be eliminated.
In contrast, when one party controls the White House and Congress, as will be the case in 2025 with Republicans, officials who see themselves as “on the same side” may hesitate to push back against each other. As a result, we may have to work harder to convince lawmakers to pay close attention to the issues that impact our members, their clients and the industry.
New Administration, Continued Constructive Advocacy
We cannot take anything for granted.
A new administration creates opportunities and challenges for our advocacy efforts. Even so, we cannot take anything for granted. That’s why we must be ready to work harder than ever to communicate effectively with decision-makers about fostering a regulatory environment that works for Main Street investors and the independent financial advisors who serve them.
Dale Brown is the President and CEO of the Financial Services Institute.
