RIA Washington Watch: Spring ahead of the Washington agenda

What is RIA Washington Watch?

Every quarter, RIA Washington Watch brings you the most up-to-date information on registered investment advisor news and policy changes to help your firm make informed decisions.

This report is current as of May 8, 2026

To a surprising degree, 2026 has been dominated by geopolitical developments. From the brief military action to remove the president of Venezuela to the kerfuffle over Greenland to the war in Iran, foreign policy has been in the headlines on an almost daily basis. The uncertainty around these events has produced a roller-coaster market that saw a first-quarter decline in all the major indexes, followed by a relief rally in which the S&P 500 and Nasdaq not only recovered—but set new all-time highs by late April.

In Washington, the combination of geopolitical uncertainty, extreme polarization, and looming midterm elections has heightened the dysfunction on Capitol Hill. Even issues with broad bipartisan support have failed to move forward, including legislation to create a regulatory framework for cryptocurrency and a housing reform bill with the goal of making homes more affordable. While those two bills could advance this summer, there is little optimism for major legislation between now and November's elections.

Regulatory agenda in the spotlight

Congressional dysfunction has put more focus on the regulatory agencies, which are comparatively much busier. While the administration is focused primarily on de-regulatory initiatives, there are some regulatory proposals worth tracking. Here are updates on several issues that are likely to have a direct impact on advisors and the markets more broadly in the weeks ahead.

Department of Labor (DOL) unveils rule to allow alternative assets in 401(k) plans. The "Investment Selection Rule," announced by the Department of Labor (DOL) on March 30, implements the president's August 2025 executive order allowing 401(k) investment options to include alternative assets. The proposal also addresses how retirement plan fiduciaries should select and oversee a plan's investment options. It sets out a "prudent process" with six factors—performance, fees, liquidity, valuation, performance benchmarks, and complexity—for a "plan fiduciary to objectively, thoroughly, and analytically consider and make determinations about when selecting" investment options. A plan sponsor that follows this process would be presumed to have met its fiduciary duty, likely shielding it from legal challenges.

Calling its proposal "asset-neutral," the DOL stated that fiduciaries are not directed toward—or away from—any particular investment. Many of the proposal's examples illustrate how alternative assets like cryptocurrency or private equity would be considered appropriate investment options if the fiduciary follows the process outlined in the rule. The proposal has broad administration support, with endorsements from Treasury Secretary Scott Bessent and SEC Chairman Paul Atkins. But it's less clear how companies feel about it and whether they will become comfortable offering more complex investment options to their employees in the future. A public comment period on the proposal is open until June 1.

Administration moving forward on "Trump Accounts." Created as part of last year's "One Big Beautiful Bill," accounts can be opened for children of any age, with all eligible children born between 2025 and 2028 receiving a one-time $1,000 contribution from the government. Parents, grandparents, employers, and others can contribute additional funds to the account, which converts to a traditional IRA once the child turns 18. The administration announced in mid-April that 5 million accounts had been opened, with about 1.2 million eligible for the government contribution. Funds can be added to the accounts beginning on July 4. Further guidance is expected in the coming weeks about the plans, including the investment options that will be available in the accounts.

SEC preparing rule to allow semi-annual earnings reports. The SEC is poised to propose a rule that would allow companies to report earnings twice a year instead of quarterly. The proposal is expected to make semi-annual reporting an option, not a requirement. SEC Chairman Paul Atkins has said that he is "agnostic" about the idea but that it could benefit smaller companies by reducing the regulatory burden and cost. He said he would prioritize the issue after President Trump called for it last September. The proposal will have a public comment period before being finalized, but Atkins has said that the goal is to have a final rule in place by the end of the year.

Prediction markets in the spotlight. An issue that has burst into the spotlight in recent months is the fast-growing area of prediction and betting markets—and the increasingly blurry lines between investing and gambling. The Commodity Futures Trading Commission has been aggressive about asserting its authority to regulate prediction markets at the federal level, even suing several states for trying to regulate these markets themselves. On Capitol Hill, concern has been growing about possible insider trading in these markets after several high-profile bets were placed on political and geopolitical events, including the removal of the Venezuelan president in January and various developments in the war in Iran. Bipartisan legislation in both chambers seeks to restrict members of Congress and administration officials from participating in these markets. Expect an increased focus on this issue in the months ahead.

Labor Department officially withdraws fiduciary rule. On the de-regulatory side of the coin, the DOL has officially rescinded the 2024 "Retirement Security Rule" that was recently vacated by two federal courts. In its place, the DOL restored the long-standing "five-part test" to determine who is a fiduciary in the retirement savings context, effective April 20. That means that one-time IRA rollover advice is once again not considered fiduciary advice. Notably, the DOL also said that the agency has "no current plans to engage in notice and comment rulemaking in this regard," though it said it may issue guidance in the future if needed. This action formally ends the effort to rewrite the fiduciary rule that has been going on for more than 15 years in Washington, but it would not be surprising if a future administration revisits the issue.

Uncertainty at the Federal Reserve

Market watchers are also keeping a close eye on the Federal Reserve. The Fed's monetary policy decisions have been consistent thus far in 2026, with the Fed holding interest rates steady at each meeting.

But the Fed has drawn more headline attention in recent weeks for personnel issues, particularly the May 15 expiration of Jerome Powell's term as chair. On April 21, the Senate Banking Committee held a confirmation hearing for Kevin Warsh, a former Fed governor (2006–2011) who is the president's choice to succeed Powell. Warsh's confirmation was briefly in limbo in April due to an ongoing dispute over the criminal investigation of Powell.

The Department of Justice (DOJ) was investigating whether Powell lied to Congress last summer about the renovation of the Fed's Washington headquarters. Senator Thom Tillis (R-NC), a member of the Banking Committee, said he would block any confirmation vote until the Powell case is resolved. On April 24, the DOJ announced it was dropping the investigation and asking the Fed's inspector general to review the renovation. The DOJ reserved the right to bring charges at a later date if warranted, but that was enough for Tillis to release his hold on Warsh's nomination.

The Senate Banking Committee approved the nomination on April 29. Up next is a series of votes by the full Senate, including one to confirm Warsh as a member of the Fed board and a second to elevate him to chair. Those votes are expected the week of May 11, likely ensuring that Warsh will be confirmed by the time Powell's term as chair ends on May 15. But Powell still has one more decision to make. While his term as chair ends in May, his term as a regular Fed governor does not end until 2028—raising the possibility that he will stay on as a governor, thereby preventing the president from nominating someone new to the seven-member Fed board.

At the same time, the Supreme Court is weighing whether the president has the right to fire a sitting Fed governor, as he tried to do last summer with Lisa Cook. Various court orders have blocked the firing, and Cook continues to serve. The Supreme Court heard oral arguments in January and seemed skeptical of the firing. A decision is expected sometime before this summer.

Both situations are tied to the president's desire for a larger role in Fed monetary policy decisions, as the president has called repeatedly for aggressive rate cuts. The Fed's traditional independence, something that has been a cornerstone of the country's financial system for nearly a century, has been under fire. But it's important to remember that the most important word in Federal Open Markets Committee is the last one: Committee. The FOMC has 12 voting members on monetary policy decisions, meaning the incoming chair cannot change rates unilaterally and will have to build consensus. For now, most of the committee's voting members seem inclined to wait for more clarity about the direction of the job market, inflation, and other critical data about the economy before making any rate change. Expectations are that the Fed will continue to hold steady until at least the fall, with some Fed watchers raising the possibility of no rate changes at all in 2026.

We watch Washington, so you can focus on your clients

Changes at the Fed, geopolitical uncertainty, inflationary risk, a dysfunctional Congress, the looming election—it all makes the market outlook for the rest of the year particularly cloudy. That uncertainty is likely to produce elevated volatility and, as a result, greater client anxiety. In the coming months, reminding clients of the importance of diversification and ensuring their emotions don't drive investing decisions will, as always, be paramount as the market navigates these next few months.

What you can do next

• Register for the next Schwab Market Talk to hear the latest information on potential impacts to the market and regulatory changes.
• Tune in to Michael Townsend's biweekly podcast, WashingtonWise, for insights on the policies and politics impacting portfolios.
• Curious about how Schwab helps RIAs? Wealth services, technology, and business support are just the beginning. Whether you're exploring independence or considering a custodian swap, we're here to help you take your next step.