It is theoretically possible that a cabinet filled with the wealthy would rule in a way that would benefit the poor and the middle class. On the campaign trail, Donald Trump contended that he knew the unfairness of the system, a system that helped him, and he would move to fix it. He would drain the swamp. Millions believed him.
The evidence that Trump’s intentions were quite different is manifest, but from my perspective the most conspicuous example is his treatment of the so-called fiduciary rule.
That rule provides that those who give retirement investment advice steer clients toward investments that are in their best interest. The current rule permits many advisers (brokers and insurance agents who work on commission) to steer clients toward investments that are suitable for them, but not necessarily in their best interests. In other words, the current rule permits conflicts of interest and resulting higher fees to clients. The new rule would transfer billions of dollars to clients away from the financial sectors which oppose the fiduciary rule. Those sectors prefer to exploit their clients. According to the White House Council of Economic Advisors, this exploitation drained $17 billion from retirement accounts. See http://www.investopedia.com/updates/dol-fiduciary-rule/.
The fiduciary rule has been scheduled in the retirement context to be phased in commencing on April 10, 2017. The SEC has been deliberating whether to extend the fiduciary rule beyond the retirement context to all who give investment advice.
If Donald Trump wanted to help the people, of course, he would conclude that industry professionals should put the interests of their clients over their own. If there is an explanation of why the “suitability” rule is permitted to reign over the fiduciary rule, it is power and corruption – pure and simple.
So it should come as no surprise that Donald Trump is attempting to delay implementation of the fiduciary rule with suggestions by some experts that his objective is to shelve the rule. See here.
Leaving Trump aside, the very existence of the suitability rule speaks volumes about the extent of corruption in Washington. Indeed, the financial industry sought to leverage its power by seeking to persuade a federal court in conservative Texas to argue that the Labor Department did not have the power to impose the fiduciary rule. Along with other courts, the Texas court has indicated that it is not persuaded. It may be difficult for Trump to stop the implementation of this rule, and savvy investors will seek out advisors who are required to be fiduciaries or will continue the widespread move to index funds. But in a government of the people, the fiduciary rule would have been imposed on all industry professionals many decades ago.
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