Financial industry targets Obama regulation as it goes into effect

With a major Obama rule that will reshape the financial planning sector set to start going into effect next week, the industry is plotting its options for lightening its burden.

To ease the impact of the Department of Labor fiduciary rule, which will require financial advisers to act in their clients' best interests, the Chamber of Commerce and other big industry groups hope to enlist Congress in pressuring the Trump Labor Department to revise the rule and for the more business-friendly Securities and Exchange Commission to write its own rule on the topic.

"This may end up being a three-legged stool," said David Hirschmann, head of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, referring to the prospect of action by Congress, the SEC and the Labor Department.

The financial industry lobbied hard over the past year and a half to stop the Obama administration from implementing the fiduciary rule, as it is known. Teaming with congressional liberals, Obama pushed the rule as part of his fourth-quarter, pen-and-phone regulatory agenda. He argued that the rule was necessary to prevent some advisers and brokers from bilking savers with tax-privileged accounts, such as IRAs. Conflicts of interest in the industry, with brokers steering clients into inappropriate high-fee investment products in return for kickbacks, cost savers $17 billion annually, the Obama White House calculated.

Industry groups, however, argued that the rule would make it unprofitable to maintain clients who are small savers or small businesses, resulting in many people losing access to investment advice.