Two major financial services groups filed comment letters this week urging the Department of Labor to finalize its proposal to rescind the 2024 independent contractor rule – but they expressed considerably different emphases and levels of enthusiasm.
The Financial Services Institute and CFP Board each submitted letters on the last day of the DOL's 60-day public comment window on the proposed rule.
Both organizations broadly support the department's effort to restore the "economic reality" framework used in 2021, though the FSI goes further in detailing the stakes for its members if the rule is not adopted.
Both groups welcome the proposal's core approach: replacing the Biden administration's 2024 multi-factor, totality-of-the-circumstances test with a clearer two-factor framework that emphasizes how much control a firm has over a worker's activities, and how much opportunity that worker has for profit or loss.
CFP Board, which certifies more than 100,000 financial planners in the US, said it backs the DOL's goal of bringing clarity to the employee-versus-contractor question. The credential-granting body said the DOL's "reliance on a predictable framework rather than a rigid or overly narrow test affords CFP professionals the flexibility to structure their businesses in the manner that they deem most appropriate."
The letter also addressed a recurring concern for advisors who operate under firm oversight but still function as independent contractors. CFP Board noted that it appreciates "the Department's recognition in the proposal that a firm's compliance-driven oversight of an independent contractor does not constitute economic control that reasonably would reflect an employment relationship." That distinction matters because many advisors affiliated with broker-dealers or independent RIAs are subject to firm supervision that is mandated by the SEC and FINRA, not by an employment agreement.
The FSI took a similar position, saying it "supports the Department's proposal to both rescind the 2024 Rule and readopt the 2021 Rule framework."
While CFP Board's letter is measured in scope – two pages, focused primarily on the independent contractor model's value to its certificants – the FSI used its twenty plus-page submission to mount a broader critique of the 2024 rule and makes a more explicit case for the economic consequences of getting worker classification wrong.
The FSI, which represents 130,000 advisors through member firms, warned that reclassifying independent contractors as employees "would lead to mass retirements of independent financial advisors, raise the cost of obtaining critical retirement planning and other financial guidance, and reduce services for underserved populations, including rural areas."
The group argued the 2024 rule was not just impractical but structurally flawed, pointing to what it described as a consistent tilt toward employee classification across each of the rule's factors – "heads I win, tails you lose," as the letter put it, for those who favored treating workers as employees. It also cited pending litigation it is party to as additional grounds for the DOL to act quickly.
CFP Board, for its part, stayed focused on the importance of the contractor model for its certificants and left broader legal and policy arguments largely aside.
For CFP Board, the priority is preserving the conditions under which financial professionals can operate as independent small business owners – maintaining their own client relationships, exercising discretion over their practices, and assuming financial risk and reward themselves.
The FSI's asks are more granular. Beyond supporting the rescission of the 2024 rule, the group urges the DOL to retain the "core factor" framework, preserve a provision giving primacy to how working arrangements actually operate in practice rather than what contracts say on paper, and keep clarifications to individual economic-dependence factors – including the treatment of regulatory compliance requirements as distinct from employer control.
The group also pressed the department to finalize the rule as quickly as possible, noting that multiple lawsuits against the 2024 rule are currently in abeyance pending the outcome of this rulemaking.
Both organizations' comments arrive as the DOL prepares to sift through feedback from a wide range of stakeholders before moving toward a final rule. For the roughly 175,000 independent financial advisors who, according to the FSI, account for approximately 60% of all producing registered representatives in the US, the outcome of that process will have direct implications for how they structure their businesses going forward.
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