As we enter the third week of the Trump Presidency, one thing is for sure: we will be in for an interesting and potentially bumpy ride over the next 4 years. Business as usual is out the window, which depending on who you talk to, is a good thing or a bad thing.
Starting well before the election and with adjustments as a result of the election, we have been looking at the strategies we use, the portfolio managers we use and our general approach to the markets. You will begin to see several changes to your portfolios and adjustments to our approach to both bond and equity investing.
These changes have been driven by two factors.
First, the Federal Reserve has started its long awaited program of raising interest rates. While the Federal Reserve will be moving very slowly, the ripple effect has already been felt in long bond prices.
Second, the new Administration is decidedly pro-business. They appear to be moving toward a roll back in regulation, lower taxes and other pro-growth policies.
The one fly in the ointment is trade policy. This remains a mystery. Is the Trump Administration all talk and no action? Probably not. But will they take such extreme measures as raising tariffs 20% on goods imported from Mexico or China? Time will tell.
Finally, I want to comment on the recent news that the Trump Administration has asked the Department of Labor to hold off on implementing the new Fiduciary rule.
As most of you know, TFG Wealth Management is a registered investment advisory firm. This means that we are held to a higher standard than most other financial professionals. The Fiduciary standard.
This means we must be acting in our clients’ best interests at all times. This means we must fully disclose all fees we receive. Simple stated, we must do business the right way.
The Department of Labor was about to implement a rule that would require any financial professional who provides advice concerning a retirement account to live up to the Fiduciary standard. I know what you are thinking. Don’t all financial professionals disclose their fees and act in my best interest? Unfortunately, this is not the case.
While we were looking forward to the implementation of this new rule, most of the financial industry has been fighting to stop it. At the end of last week, the Trump Administration announced that it has asked the Department of Labor to delay the full implementation of this rule until they can review it.
Even though the full regulation may not be implemented, let’s hope that just the threat of a change in rules will help clean up the financial industry in favor of the average investor. Until then, we continue to be committed to doing our best for the families we serve.
All the best,
Mark
