FSI Lauds Introduction of SRO for Investment Advisers Legislation

April 24, 2012

‘It’s time to protect investors and level the playing field.’

The Financial Services Institute (FSI) today lauded legislation introduced by House Financial Services Committee Chairman Spencer Bachus (R-AL) creating a self-regulatory organization (SRO) for retail investment advisers.

“Hard-working American investors shouldn’t have to be regulatory experts to know whether their financial advisor is getting the proper oversight needed to ensure they’re protected,” FSI President & CEO Dale Brown said. “From a business standpoint, retail investment advisers have an unfair advantage over independent broker-dealers, who are examined by FINRA every two years. It’s time to protect investors and level the playing field.”

FSI has long called for a properly structured and uniform fiduciary standard and has endorsed FINRA to be the SRO for retail investment advisers. Last summer, FSI testified at a House Financial Services Capital Markets Subcommittee hearing on implementing the Dodd-Frank Act. It testified that a uniform fiduciary standard and FINRA as SRO for retail investment advisers is critical to rebuilding consumer confidence and overall confidence in our national economy.

A recent FSI poll of over 2,000 financial advisors showed roughly 75% of them favored an SRO for retail investment advisors (click here for poll).

“The current regulatory disparity not only puts investors at great risk, it undermines investor confidence, which in turn jeopardizes not only the investment goals of millions of Americans but also the economy at large,” Brown continued. “Since the start of the legislative process that resulted in Dodd-Frank, FSI has urged Congress to adopt legislation that would allow the SEC to close the regulatory gap, by approving an SRO for retail investment advisers. If adopted, this legislation would accomplish that goal and bring about significant improvements in investor protection, and an even playing field for all financial advisors. And we believe FINRA is in the best position to be the SRO for retail investment advisers.”