Advisers ramping up discussions with legislators, regulators on key issues

With the midterm elections hanging over the national political landscape for most of this year, it’s no secret that very little significant legislation was passed at the federal level in 2014. Rather than waiting for the dust to settle, though, the Financial Services Institute Inc. and our financial adviser members have taken this as an opportunity to ramp up our engagement with lawmakers and regulators in the states, both to make our industry’s voice heard on new proposals that could affect advisers’ businesses and to work with state officials to make progress toward common goals.
Increasing engagement starts with dialogue, and financial advisers throughout the country have responded enthusiastically this year to our efforts to help them build relationships with state legislators and regulators. In 2014, more than 140 of our financial adviser members in 21 states took part in face-to-face meetings with state lawmakers and officials, working to educate them on the independent advisory business model and the differences between their practices and large Wall Street firms, among many other key topics.
Advisers also are taking the opportunity to get involved directly with lawmakers’ and other state officials’ discussions on legislation that will affect their businesses and their clients. FSI adviser members recently attended public meetings of both the Connecticut Retirement Security Board and the Maryland Governor’s Task Force to Ensure Retirement Security for All Marylanders to make sure that our industry’s concerns about proposals to create state-run retirement plans for private sector workers are factored in to these groups’ deliberations. (The Connecticut Retirement Security Board is developing a proposal for implementing a state-run retirement plan in the state; the Maryland Governor’s Task Force is developing recommendations to increase retirement preparedness in that state.)
CROWDFUNDING
Adviser involvement has also been critical in our advocacy efforts with the North American Securiities Administrators Association and individual state securities regulators this year. In the relatively new and growing practice of crowdfunding, for example, many advisers have voiced concerns that they could be faced with liability risk. One of the main features of crowdfunding ventures is that they are not offered through a traditional brokerage platform and therefore are not subject to many financial rules and regulations.
A client could discuss with their adviser an interest in investing in a crowdfunding venture perhaps by asking the adviser to liquidate assets to allow them to invest. The crowdfunding venture by its very nature would not be offered through the adviser or their firm, and in this scenario, the client would invest without their advice or involvement. The crowdfunding venture could ultimately be unsuccessful, and advisers and their firms are concerned the client could then claim the adviser should have advised them against investing.
We have submitted comment letters to state regulators’ offices throughout the year to express these concerns and have urged states to provide additional investor education and model disclosure language to clarify that financial advisers and their firms are not involved in crowdfunding ventures.
Advisers have also been very closely involved in our ongoing efforts to build and strengthen relationships with state lawmakers and regulators by collaborating with them to achieve solutions to common problems. In 2014, we sponsored seven financial literacy events around the country, appearing with state lawmakers and congressional representatives at local schools to give presentations on basic financial concepts. Financial literacy is an area our adviser members are passionate about, and we were very pleased to have 11 advisers take part in these events. We and our members are also continuously looking for ways to support state securities offices’ outstanding efforts to strengthen financial literacy in their communities.
ELDER ABUSE
Another key area of focus for the FSI and our adviser members has been addressing the crisis of elder financial abuse. In meetings with state legislators and regulators, and in their conversations with us, our adviser members have helped drive a better understanding of this problem and have helped emphasize to state officials that we are committed to working with them to find a solution. State regulator input on this issue has been critical in establishing the FSI’s Elder Abuse Prevention Resource Center, accessible through our website. The webpage includes reporting information for each individual state, as well as a variety of additional information and guidance on this important topic. Advisers often are in the best position to spot and report suspected financial abuse of their vulnerable clients, so this reporting information is essential to assist them in alerting the proper authorities.
Effective advocacy at the state level is something no single organization can accomplish without the passionate, continuing support of its members around the country.
As our communities’ rapport with state legislators and regulators has grown over the years, they have come to view us and our members as key sources of valuable perspective and insight, and have increasingly come to seek our feedback on important questions and proposals.
Dale Brown is president and chief executive of the Financial Services Institute Inc.