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 August 7, 2026

After a rocky first quarter for most major indexes, the second quarter rebounded in a big way. The S&P 500 rose by 15% and the Nasdaq by more than 21%—the best quarterly performance for both since 2020. Strong corporate earnings, the continued spending boom on artificial intelligence, less tariff-related volatility, and an easing of the Iran war all contributed to the strong quarter.

But as we move further into the third quarter, volatility has returned. The on-again, off-again war in Iran seems back on. Global trade is again being pressured by the difficulty of shipping through the Strait of Hormuz. New tariffs have reentered the conversation. Meanwhile, congressional dysfunction and the looming elections are not helping. Congress seems hopelessly paralyzed, with the House and Senate struggling to get on the same page on numerous issues despite Republicans holding majorities in both chambers. The result? Much of the action RIAs should watch is taking place at regulatory agencies.

Updates on client and investor communications

SEC unveils long-awaited e-delivery proposal. On July 16, the SEC proposed a rule that would allow financial services providers to send most regulatory documents to investors electronically by default, while still giving investors the option to receive paper copies.

If implemented, the rule would cover a wide range of investor communications, including prospectuses for funds and other issuers, annual and semiannual fund shareholder reports, proxy statements, trade confirmations, disclosures pursuant to Form CRS, and Form ADV Part 2 brochures. "In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard," SEC Chair Paul Atkins said in a statement announcing the proposal. Schwab, along with much of the financial services industry, has long advocated for e-delivery, so the proposal is a huge step forward. A 60-day public comment period is open until September 21.

Movement on reporting cadence issue for public companies. At the same time, the SEC is sorting through more than 200,000 public comments—a record for any issue—on its proposal to allow public companies to report their earnings semiannually rather than quarterly. The overwhelming majority of commenters are opposed to the proposal due to concerns about reduced transparency. But the proposal is optional for companies, and it's far from clear that many large companies would switch to semiannual reporting even if given the opportunity. We expect the SEC to issue a final rule, possibly modified from the initial proposal, by the end of the year.

Trump Accounts launch, but questions linger

One of the administration's signature initiatives, Trump Accounts, became operational on July 4. Created as part of last year's One Big Beautiful Bill, the accounts are for children of any age and allow for annual contributions of up to $5,000 from parents, grandparents, employers, philanthropists, and others. The money is invested in low-cost index funds, with a State Street S&P 500 ETF tapped as the initial default investment. The administration said four more index funds—including two from iShares, a second State Street fund, and a Vanguard ETF—will soon be added as investment options.

When the account holder turns 18, the account converts to a traditional IRA. But the primary attention-grabber for the accounts is the $1,000 seed contribution from the federal government for every child born in 2025 through 2028.

The Treasury Department reported in July that Americans had opened about 6.5 million accounts, of which 1.4 million (less than 25% of babies born since January 1, 2025) were eligible for the government contribution. With one administration official saying publicly that the goal is for all 70 million kids under 18 to have an account, we can expect a marketing blitz from the administration to raise awareness and encourage new parents to open accounts. The Social Security Administration announced that it was working on a plan to allow parents to open an account from the hospital as part of the process of registering their newborn with a Social Security number.

Several details about how the accounts will work are still to be determined. The administration announced that the accounts would soon accept donations of stock, but the process is still in development. It's also unclear whether stock donations to Trump Accounts will get the same tax treatment as donations to a charitable organization. If so, this could boost interest in the accounts from a tax-planning standpoint. Another key unknown is when and how accounts can be rolled over to an account holder's preferred financial services provider. While Bank of New York Mellon and Robinhood will initially run the accounts, the administration has said that transfers to any brokerage will be possible soon.

New era at the Federal Reserve

Kevin Warsh brings change to the Fed. As Kevin Warsh settles in as new Fed chair, the focus has been on stubborn inflation and whether the Fed will need to hike rates later this year. A mid-July report that inflation had cooled bought the Fed some time, pushing a potential rate hike off until fall. But Warsh himself warned that overthinking a single inflation report was a mistake. Testifying in July before Congress, Warsh said that "there might be some who look at [the July] data and say, 'Mission accomplished.' That is not my view." Warsh told lawmakers in no uncertain terms that the Fed would get inflation down to its target of 2%, though he did not commit to a timeframe for doing so or what tools the Fed would use to get there.

More broadly, Warsh is looking to make significant overhauls to how the Fed operates. During his confirmation hearing in the spring, he said the Fed "overcommunicates" and relies on too many outdated processes and ways of thinking. He formed five independent, three-person task forces—stocked with former central bankers, academics, business leaders, and a Nobel laureate—to dive into virtually every aspect of how the Fed operates: Communications, the balance sheet, Fed data, inflation measurement, and productivity and job analysis. Warsh asked the teams to provide recommendations by the end of the year. Big changes are likely coming, particularly in how much and how often the Fed communicates. Warsh has not committed to a press conference after every monetary policy meeting, and he's made clear his disdain for the "dot plot," where every Fed member provides their outlook on where interest rates are headed. Expect a raft of changes to Fed operations in early 2027.

Independence at the Fed. The Supreme Court weighed in on the highly-anticipated case of whether the president can fire a Fed governor. The president tried to fire Fed Governor Lisa Cook last August, ostensibly for allegations of mortgage fraud committed before she was nominated to the Fed (she has not been charged with a crime). In a 5-4 decision on June 29, the court ruled that Cook had not been afforded due process, sending the case back to the lower courts while she continues to serve at the Fed in the meantime.

While the Court ultimately ruled on process, it did not avoid the larger issue in the case: The central bank's independence. Writing for the majority, Chief Justice John Roberts acknowledged that the Fed's independence was critically important. "Not only the fact of independence but the appearance of independence is key to the Federal Reserve's design," Roberts wrote. Allowing the president to fire a Fed governor without any process, he added, "would in effect transform the Federal Reserve's for-cause protection into at-will employment—an interpretive leap out of step with the statute Congress enacted and our Nation's tradition of central banking protected from political interference."

Midterm election season is heating up

With just three months remaining before the midterm elections, political uncertainty is beginning to take center stage.

All 435 House seats will be on the ballot this fall. Unusual mid-decade redistricting efforts in 10 states may give Republicans a net gain of a handful of seats, but voters will have the final say in November. Considering the historical precedent of the president's party failing to gain House seats in all but three midterm elections since 1906, the president's low approval rating, polls showing voter frustration with the economy, and other headwinds, Republicans face a poor outlook. Democrats are favored to capture the House majority, likely by a handful of seats.

On the other side of Congress, we're in for a tighter race. Republicans currently hold a 53-47 majority in the Senate, meaning Democrats need to gain at least four seats to take control. Of the 35 Senate seats on the ballot, just four races are toss-ups: Georgia, Maine, Michigan, and North Carolina. But even if Democrats sweep those four (far from certain), they'll see a net gain of only two seats. To supplement, Democrats also hope to pull off at least two more wins in red states like Alaska, Iowa, Ohio, and Texas—an outcome that's possible but may not be likely. For now, Republicans are narrowly favored to retain their majority in the Senate, potentially resulting in a split Congress for the next two years that may set new standards for gridlock and dysfunction.

We watch Washington, so you can focus on your clients

As market volatility tends to increase during the run-up to an election, client anxiety can grow at this time, too. Helping clients stay focused on long-term financial plans—while avoiding emotional decision-making—will remain one of the most important roles that advisors can play in the months ahead. As always, the Schwab team in Washington will continue to provide RIAs with our latest perspective on policy and political developments to help support those conversations.