Can Main Street Businesses Thrive in the Trump Era?

Empowering American workers was a core tenant of President Trump’s campaign platform. He promised a series of policy changes and replacements to alleviate Main Street concerns across the country. During his first month in office, however, President Trump’s commercial focus has been on rolling back Obama Administration policies and meeting with large corporations. For small and medium businesses (SMBs), it remains to be seen exactly how Trump’s policy approach will help or hinder business growth, and impact healthcare, financial and other services crucial to operations.

Here are three key policy developments for SMBs to watch over the next few months, and what businesses need to be aware of to succeed through it all – and into the future.

Uncertain prospects for Fiduciary Rule.

The Fiduciary Rule, a regulation set in motion by the Obama Administration’s Department of Labor, formalizes a financial industry standard practice to put retirement and IRA client needs ahead of advisor business revenue. Advocates for keeping the regulation in place argue that it protects workers from retirement plans riddled with high (and well-hidden) fees. Opponents argue the rule decreases access to retirement advice and increases opportunities for consumers to sue advisors. Efforts to overturn the rule, initially set to take effect April 10, took a hit when a federal judge in Texas decided to uphold the Administration straddling regulation. Despite the judge’s ruling, the U.S. Labor Department proposed a 60-day delay of the rule, during which time they plan to examine the impact of the rule on consumers’ ability to access retirement and financial advice.

What this means for your small business:

The chief risk of taking the fiduciary rule off the table is that its absence could embolden financial advisors to not be held accountable if they cross the line into predatory investment practices. For SMBs, real dollars are at stake – up to potentially $17 billion in extra fees, according to the Obama Administration – and implications for the health and welfare of employees. Whether or not the rule is upheld, the market is generally moving toward lower-cost, more transparent investment options, leading to heightened scrutiny among investors. Consequently, employers should take stock of the fees associated with their retirement plans and consider holding financial advisors accountable for fiduciary conduct.

A new Labor Secretary nominee.

Lengthy confirmation hearings for key officials, a large corporation-focused business agenda and Andrew Puzder dropping out as nominee for Secretary of Labor has made it tough for SMBs to fully grasp how employment and labor oversight will work with the young Trump Administration. However, the nomination of seasoned legal expert Alexander Acosta to the post of Secretary of Labor is seen by many as a promising development. Chiefly, Mr. Acosta does not bring the corporate baggage or labor dispute history of Puzder to the position. It also helps that he has successfully gone through three confirmation hearings and served under previous Administrations – a rare combination of experience for a Trump Cabinet appointee. Additionally, Acosta has personally worked on labor issues and policy while serving on the National Labor Relations Board under President George W. Bush. The Senate hearing and vote to confirm Acosta is set for Wednesday, March 22.

What this means for your small business:

 

Secretary-nominee Acosta has been publicly supportive of Cabinet-level government agency rulemaking, versus administration of centralized policies from the White House – a stance that contradicts President Trump’s, but is more advantageous to SMB owners accountable for employment practices. Unlike previous Labor secretary nominee Puzder, unions and labor groups are optimistic that Acosta would put corporate interests on the back-burner in favor of fair labor policies focused on compliance and workforce standards for the wider U.S. business community. SMBs should take note of any changes in Acosta’s tone during his confirmation hearing, and pay attention to the level of coordination between Trump’s White House and the Department of Labor once he’s confirmed.

Nixing state-run IRA programs.

State-run IRAs initiated under President Obama were poised to be the only way a sizable number of tax-paying U.S. workers could actively save money for retirement. In fact, five states have been preparing to launch programs aimed at closing the offering gap over the next year. The California Secure Choice Act, for example, would provide coverage to 7 million employees who lack access to workplace plans. Recently, the House of Representatives made significant strides toward halting those rollouts entirely.

What this means for your small business:

The goal of President Obama’s state-run IRA regulation was to offer an alternative path to retirement preparation – especially for those who do not have access to savings plans through an employer. If the regulation is rescinded and state-run programs remain shuttered by President Trump and Congress, millions will be without retirement savings options and responsibility will fall squarely back on employers. Congress’s move to block the regulation before states have the chance to launch programs means it’s more urgent than ever for SMBs to look internally to make sure they are not only offering retirement benefits, but plans that are cost-effective and inclusive.

A Certain Future

U.S. presidential administrations usually last between four and eight years. Many businesses thrive for decades. Regardless of where on the political spectrum you fall, it is important for SMB leaders to keep tabs on major policy developments that impact not only operations, but their employees – especially when significant changes can be expected from America’s highest office switching hands.

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