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Money Management

Managers to benefit no matter who wins midterms – Moody’s

Money management firms generally will benefit whether Democrats win control of the House of Representatives in the Nov. 6 election or Republicans maintain a majority, according to a Moody's Investors Service report.

"Although we expect the pace of financial legislation to slow, pending legislation that promises to expand the asset base of asset managers, a credit positive, will likely become law regardless of the outcome of the elections," the report states.

The bipartisan legislation, JOBS Act 3.0, "aims to improve capital formation and reduce the associated costs for relatively small issuers as well as ... expand the base of investors and improve their protections," the report said. "It would benefit asset managers by broadening their asset base and providing new revenue streams."

Although the legislation is likely to pass regardless of which party controls the House, resolution of other issues — specifically tax legislation and the future of Regulation Best Interest, the proposed replacement for the Department of Labor's fiduciary rule — are less certain, the report said.

A GOP-led House "is more likely to pass a bill making permanent the individual and small-business tax cuts of the 2017 tax law, while also addressing the recent executive order promoting retirement savings," according to Moody's. That would encourage savings "that would likely grow asset managers' asset base and improve their bottom line," the report said.

Meanwhile, the report said, the Securities and Exchange Commission's fiduciary regulation proposal is unlikely to pass as now written if Democrats lead the House. A prolonged debate, Moody's said, would benefit money managers with lower-cost investment products as debate would focus on managers' fees and revenues.

The full report is available on Moody's website.