Elon Musk and Vivek Ramaswamy, prominent allies of former President Donald Trump, have proposed an ambitious plan to overhaul the federal government through significant budget cuts, personnel reductions, and regulatory rollbacks.
Their vision, championed under the banner of the so-called Department of Government Efficiency (DOGE), aims to reshape the federal landscape dramatically by July 4, 2026—the 250th anniversary of the nation’s founding.
For wealth advisors and registered investment advisors (RIAs), this initiative raises important questions about the future of the Securities and Exchange Commission (SEC), the primary regulator for the investment advisor and brokerage industries.
A New Era for the SEC
One immediate certainty is that the SEC will have a new leader. Current Chairman Gary Gensler announced that he will step down on January 20, 2025, Inauguration Day. Any Trump-appointed successor is likely to bring a markedly different approach to the SEC, potentially easing regulatory pressure on industries such as cryptocurrency and pursuing a less aggressive enforcement agenda.
However, the SEC’s $3.02 billion budget for fiscal year 2024—accounting for a negligible 0.0% of the federal government’s $6.75 trillion annual spending—means it is not a prime target for the sweeping cuts Musk and Ramaswamy envision. Instead, their focus lies on rolling back regulations they argue stifle economic growth, leveraging recent Supreme Court rulings that have curtailed the ability of federal agencies to enact rules without explicit congressional authorization.
In an op-ed for The Wall Street Journal, Musk and Ramaswamy explained that DOGE would work with legal experts within federal agencies to identify regulations that could be paused or rescinded via executive action. They envision President Trump taking immediate steps to halt enforcement of such regulations, initiating a broader review process.
Regulatory Rollbacks: What It Means for RIAs The SEC has long been a target of criticism for its regulatory reach. Yet, even among the industry, there’s often little appetite for undoing established rules once firms have adapted to them. Igor Rozenblit, managing partner at Iron Road Partners and a former SEC official, notes that rescinding regulations can create more disruption than benefit for regulated entities.
“Once rules are implemented and firms adjust, there’s not much incentive to roll them back,” says Rozenblit. “It often does more harm than good to revisit regulations after the industry has settled.”
For RIAs, a Trump-appointed SEC leader may bring changes in enforcement priorities. Duane Thompson, president of Potomac Strategies, suggests that a leaner SEC could result in fewer examinations for smaller firms, potentially shifting oversight to state regulators. This approach might appeal to RIAs who feel overburdened by federal scrutiny, but it also raises concerns about consistency and effectiveness in investor protection.
Enforcement and Investor Protection
While DOGE’s vision includes sweeping regulatory changes, the SEC’s core mission of investor protection and fraud prevention is unlikely to diminish entirely. Sanjay Lamba, associate general counsel at the Investment Adviser Association, emphasizes that the SEC’s institutional culture prioritizes its role as a “cop on the beat.”
“Even with a change in leadership, the day-to-day enforcement activities to protect investors and root out fraud will remain a sobering reality for any incoming chair,” says Lamba.
However, shifts in regulatory focus could lead to fewer high-profile cases against major Wall Street firms or less rigorous oversight of emerging industries like cryptocurrency. For RIAs, this might translate to longer intervals between examinations and a reduced regulatory burden—an outcome many in the industry might welcome, albeit cautiously.
Budget Cuts and Workforce Reductions
Musk and Ramaswamy’s broader plan for DOGE includes strategies to cut federal headcounts, such as mandating five-day in-office work weeks to encourage voluntary resignations. They’ve also floated ideas like relocating agency offices to less desirable locations—a tactic previously employed by the Trump administration with the Department of Agriculture.
For the SEC, these measures could face significant legal and logistical challenges. The agency’s workforce is unionized, which could limit the ability to enact sweeping changes without facing lawsuits. Senior management, however, is not unionized and may be more vulnerable to reductions, potentially destabilizing the agency’s leadership.
Rozenblit remains skeptical about the feasibility of such workforce cuts. “Any effort to enact mass reductions will face significant legal hurdles, and the timeline for resolving those challenges could stretch into years, not months,” he says.
What’s Next for RIAs?
For wealth advisors and RIAs, the potential changes at the SEC underscore the importance of staying informed and proactive. While a lighter regulatory touch might reduce compliance costs in the short term, it also introduces uncertainty about the stability and consistency of oversight.
Advisors should prepare for potential shifts in examination cycles and enforcement priorities, particularly regarding smaller firms. Delegating oversight to state regulators could mean varying standards and increased complexity for firms operating in multiple states.
At the same time, RIAs must remain vigilant about maintaining strong compliance practices, regardless of any perceived regulatory relaxation. Investor trust, built on transparency and adherence to best practices, remains paramount.
Navigating the Future
As Musk and Ramaswamy push forward with their ambitious DOGE initiative, wealth advisors and RIAs must balance optimism about reduced regulatory burdens with caution about the broader implications for investor protection and industry stability. The SEC’s enduring mission to safeguard investors and uphold market integrity will likely remain a cornerstone of its operations, even amid leadership changes and potential budget cuts.
For advisors, this period of transition presents both challenges and opportunities. By staying engaged with regulatory developments and adapting to evolving oversight, RIAs can position themselves to thrive in a potentially transformed landscape while continuing to prioritize their clients’ best interests.
