Broker-turned-congressman French Hill brings adviser skills to Capitol Hill

Background makes Arkansas legislator, no fan of DOL fiduciary proposal, a go-to source on financial services issues

May 15, 2015 @ 11:51 am

By Mark Schoeff Jr.

On a typical day in Washington, Rep. French Hill, R-Ark., is pulled in several different directions.

A former broker, the freshman legislator has to juggle votes on the House floor, hearings, and meetings with constituents, colleagues, regulators and other officials.

“It takes planning, just like it does when you're trying to decide how to develop your call program when you're a financial adviser,” Mr. Hill, 58, said in an interview in a hallway just off the House floor. “My financial adviser skills were good training.”

The venue for the chat was fitting because Mr. Hill had just cast a vote and was on his way to a hearing that would include discussion of a bill he's drafted to increase investor access to research about exchange-traded funds.

During congressional recesses, he goes home to a stream of constituent events. The pace requires him to hold frequent scheduling meetings with his staff. Through all this activity, he relies on the traits he developed as the founder, chairman and chief executive of Delta Trust & Banking Corp. in Little Rock.

VALUABLE RESOURCE

Although he has only served in Congress for a few months, Mr. Hill is becoming a valuable resource to his colleagues on the House Financial Services Committee who know he has had experience as a securities broker, investment manager, community banker, trust administrator and insurance salesman.

“I've just tried to be a practical, commonsense business resource since I joined the committee,” Mr. Hill said, his lanky 6'2” frame leaning against a Capitol pillar.

During a May 1 hearing of a financial services subcommittee featuring Financial Industry Regulatory Authority Inc. chairman and chief executive Richard Ketchum, Mr. Hill was cited by the panel chairman, Rep. Scott Garrett, R-N.J., for helping get the panel up to speed on Finra's controversial data-collection proposal, the Comprehensive Automated Risk Data System.

The idea is drawing criticism from Republicans, including Mr. Hill, who personally had years of experience being regulated by Finra. He maintains that Finra doesn't need CARDS to become more data fluent and quickly spot patterns of dangerous investment-product sales practices.

“I believe Finra can meet its goals of early warning, surveillance and oversight through the existing tools and technology they have,” he said.

The regulator has put CARDS on hold as it rethinks the program amid charges it would create a costly compliance burden for firms and expose customer data to hackers.

When Mr. Ketchum was at the witness table, Mr. Hill pressed him about whether the self-regulator is fair to small firms. Mr. Hill said regulations can be overbearing for that part of the brokerage industry.

“They're just not staffed to fully be able to execute in the way a large firm is,” he said.

OPPPOSES DOL FIDUCIARY

Like many of his GOP colleagues, Mr. Hill opposes the Department of Labor proposal that would require brokers to act in the best interests of their clients when working with retirement accounts. Brokers currently meet a less-stringent suitability standard. Opponents argue the proposal would raise regulatory and liability costs for brokers and potentially price them out of the advice market for middle-income clients.

Mr. Hill groups the DOL fiduciary-duty rule with earlier attempts by the Obama administration to curb 529 college savings plans and cap individual retirement accounts. He calls it a “war on savings.”

“I don't understand why we're trying to make it harder for people to save or seek an adviser to have a savings plan,” he said.

He has co-sponsored a bill that would require the DOL to halt its rule until the Securities and Exchange Commission decides whether to pursue its own rule aimed at retail investment advice, which could take months or years.

“Even with the exemptions proposal by the Department of Labor, they're in conflict,” Mr. Hill said, referring to the DOL rule and a potential SEC rule. “There's going to be more confusion.”

Last year, Mr. Hill sold his firm to Simmons First National Corp. of Pine Bluff, Ark., for $66 million. He said he had a written succession plan in place, just in case the firm didn't sell and he won his congressional seat. He was one of a handful of advisers running for congress in 2014.

Much of Mr. Hill's financial support for his $2.2 million campaign came from the financial services industry. But he brushes off criticism that he is influenced by Wall Street.

ECONOMIC GROWTH A FOCUS

“I campaigned on regulatory and legislative policies that spur economic growth,” Mr. Hill said. “The people of Arkansas elected me, in my view, because of my very long background in private business and studying economics and proposing policy ideas that will increase economic growth and thereby increase jobs.”

No stranger to Washington, Mr. Hill served as a Treasury Department official during the George H.W. Bush administration, and also had been an aide to a senator and the Senate Banking Committee.

In his latest Washington tour, Mr. Hill said he believes Republicans and Democrats can overcome the partisan fissures that have characterized the capital by concentrating on narrower, targeted bills.

“We need to pass those bills that move the economy forward, and we need to celebrate that we did that,” Mr. Hill said. “Maybe that will help be a building block to more complicated things.”

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