Legislation that would ease the regulatory burden on small investment advisory firms recently sailed through a House committee, giving its supporters hope that it also will find momentum in the Senate.
The House Financial Services Committee approved the Small Entity Update Act last Wednesday as part of a package of 15 bills the panel advanced to the House floor for a vote by the full chamber. The legislation would direct the Securities and Exchange Commission to conduct a study and carry out a rulemaking on the definition of a “small entity.”
The bill is designed to force the SEC to calibrate its regulations so that compliance isn't overly burdensome for small businesses. The agency is supposed to do that under the existing Regulatory Flexibility Act. But the legislation’s author, Rep. Ann Wagner, R-Mo., and chairman of the Financial Services subcommittee on capital markets, said the SEC needs a further push to scale regulations appropriately.
“This will lead to a more targeted regulatory environment for small businesses,” Wagner said during the panel’s markup last Wednesday.
Rep. Sean Casten, D-Ill., praised the legislation. “This is a good-government bill,” Casten said.
The Investment Adviser Association backs Wagner’s bill. The group argues that the SEC’s definition of a small advisory firm needs to be revised because the agency currently considers small advisors to be those with $25 million or less in assets under management despite the SEC registration threshold of $100 million in AUM.
“It desperately needs to be updated,” said Neil Simon, IAA vice president for government relations.
The group has been pushing for the legislation for several years. The strong backing the Wagner bill achieved across the aisle in the committee gives Simon hope for continued legislative momentum.
“Bills that gain strong bipartisan support have very good prospects not only for getting through the House but also being taken up in the Senate,” he said.
The Wagner bill doesn't specifically mention small investment advisors, but Simon said it would apply to future regulations affecting them.
"We are confident that [the bill] includes investment advisors because the current definition of small entities that applies to small advisors is antiquated," he said.
The IAA would like to see a definition of small advisor that's based on number of employees or some other metric.
The SEC could change the definition on its own. Simon said the IAA has talked to SEC officials and received a “sympathetic” hearing about oversight of small advisors. But the agency has not yet changed its rubric. It would be required to do so under Wagner’s bill.
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
