It's not often anything so unclear can be so clear. No, I'm not talking about the amazing presidential election. Wait. Yes I am. In a way. As a long-time securities analyst and portfolio manager, I've had to dig deep into business trends of various industries and learn how to read the otherwise random patterns of economic tea leaves. Hmm, patterns. That's an apt description. Here's why.

Years ago, I wrote a paper on the psychology of winning chess. In my research I discovered why it's surprisingly easy for humans to consistently checkmate supercomputers with sophisticated programming: pattern recognition. The more games of chess a grandmaster plays, the more patterns he can quickly and efficiently recognize. This is the key to winning chess (especially against a computer, where nonverbal techniques go unnoticed).

When it comes time to identify the three least expected trends that 2017 will shortly reveal to us, it comes down to pattern recognition. This is most acutely true given today's unpredictable political and regulatory environment. Or, is it that unpredictable?

Unexpected development #3: The current version of the DOL's fiduciary rule will be DOA.

Many fiduciary thought leaders feel, despite President-elect Trump's opposition to the new rule, the regulation will go unchallenged for several reasons. First, the industry is already moving toward acceptance. For example, several brokerage firms have already announced they will eliminate commissions for IRAs.

Second, repealing the fiduciary rule is simply not a priority for the new administration (it failed to make the list in Trump's “New Contract with America” speech in Gettysburg.) What many fail to recognize, though, is that Trump is a deal maker and there are plenty in Congress who want to see the fiduciary rule go away. It's therefore safe to assume repealing the fiduciary rule will be one of those “players to be named later” in the many deals Trump will make with Congress to realize his stated priorities.

Unexpected development #2: The fiduciary battle begins in earnest among top financial service providers with deep advertising budgets.

The clue here is something I said above: “Several brokerage firms have already announced they will eliminate commissions for IRAs.” Well, several other brokerage firms insist they will keep commissions on IRAs. All I have to say is “Let the advertising war commence!” The marketplace has long anticipated this inevitable conflict and 2017 will be the year we finally witness it.

Unexpected development #1: The need for state-sponsored IRAs rapidly diminishes.

Speaking of competition, once Congress passes (as expected) legislation allowing open 401(k) MEPs, you'll see an avalanche of these plans coming from the private sector. They will be competitively priced compared to their state-sponsored counterparts, but will have the added advantage of ERISA protection and broader savings and investing features. Retirement savers will look back and wonder “Why didn't anyone think of this before?”

There you have it. Wasn't that easy? Now, if we only had room for a child IRA …

Instant Insights /

Fiduciary is dead! Long live fiduciary!

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