Say what? Advisers ask lawmakers for more regulation, fees

Investment Adviser Association, TD, Schwab hit Capitol Hill armed with odd message
OCT 03, 2013
A couple dozen investment advisers fanned out across Capitol Hill with an unusual “ask” of lawmakers today. They weren't seeking less regulation and lower fees, they were seeking more. The Investment Adviser Association sent about 45 members to the Hill to lobby legislators and their aides in favor of legislation that would authorize the Securities and Exchange Commission to charge advisers user fees to fund adviser examinations. The bill, introduced in March by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, is designed to increase the number of adviser exams each year. The SEC has said that it can examine annually only about 8% of the nearly 11,000 registered investment advisers. Skip Schweiss, managing director of adviser advocacy for TD Ameritrade Institutional, said that advisers agree that that number is too low. “We're coming with an unusual message,” said Mr. Schweiss, who was in Washington to participate in IAA's lobbying. “We understand there's a cost to regulating us, and the industry is willing to bear that cost.” Schwab Advisor Services also took part in the IAA lobbying effort. Advisers support Ms. Waters' measure over an alternative — which has not yet been introduced this year — that would establish a self-regulatory organization for advisers. The worry is that the Financial Industry Regulatory Authority Inc., the broker-dealer SRO, would become the adviser SRO. Last year, then-chairman of the House Financial Services Committee, Rep. Spencer Bachus, R-Ala., introduced an SRO bill. But it died in committee, as did last year's version of Ms. Waters' user-fee bill. Mr. Bachus has not re-introduced his legislation. Even though Finra for the moment has backed off its strong push for an SRO and the user-fee bill has the field to itself, advancing the measure will be tough. Most Republicans view an SEC user-fee as the equivalent of a new tax or as expanding the SEC's budget — both of which draw wide opposition in the party. “It will be a long shot getting Republican co-sponsorship in the House,” said Neil Simon, vice president of government relations for the Investment Adviser Association. “There's a better shot at getting bipartisan support in the Senate.” Some IAA members were pursuing that goal. “We would love to find a Senate champion,” Mr. Schweiss said. “We'll explore that today.” Knut Rostad, president of the Institute for the Fiduciary Standard, has another “ask” in mind for his Hill visits. The regulatory and compliance officer at Rembert Pendleton Jackson Investment Advisors in Falls Church, Va., will be plying his state's congressional delegation to pressure the SEC not to water down the fiduciary-duty standard, if it proposes a rule for a uniform fiduciary standard. The SEC request for information for a cost-benefit analysis of a potential rule included parameters that would undermine fiduciary duty, according to Mr. Rostad. He wants lawmakers to write to the SEC with the same volume and vigor that they've pressed the Department of Labor on that agency's pending fiduciary-duty rule. “The bottom line should be: Do not proceed with rulemaking unless the uniform standard is no less stringent than the [19]40 [Investment Advisers] Act,” Mr. Rostad said. Although it's not likely that Mr. Rostad or the other advisers will achieve decisive gains on the Hill, the inroads they make may pay off later. “The lobbying IAA does resonates all the more, when members [of Congress] realize that there are individual advisory firms in the states and communities they represent,” Mr. Simon said.

Latest News

Social Security COLA rises to 3.6% for 2027, largest since 2023
Social Security COLA rises to 3.6% for 2027, largest since 2023

Fuel-driven inflation drove the supersized adjustment, but advocates say retirees are still losing ground as trust fund insolvency nears.

Retirement advisors have a major small business opportunity
Retirement advisors have a major small business opportunity

State mandates and plan complexity are opening doors for financial advisors in the 401 market.

Most pre-retirees are planning without a planner - and it shows
Most pre-retirees are planning without a planner - and it shows

New LIMRA data reveal a stubborn advice gap that financial professionals are well-positioned to close.

Treasury hits BofA with $1.2B fine over money laundering violations
Treasury hits BofA with $1.2B fine over money laundering violations

“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” said Treasury Secretary Scott Bessent.

The hidden cost of growing a firm without intention
The hidden cost of growing a firm without intention

To build a truly self-sustaining practice, enterprising advisors have to start with a vision of what they want to be – and accept the realities that come with building toward it.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor