Today, the U.S. House of Representatives passed the Protecting the Right to Organize (PRO) Act.
The Financial Services Institute (FSI) has opposed the PRO Act because it reclassifies independent financial advisors from independent contractors to employees under the National Labor Relations Act, undermining these advisors’ choice to be independent. FSI requested a carve-out for the independent financial services industry due to its business model’s unique nature. However, the bill passed by the House did not include such a carve-out.
“We are disappointed in the House’s vote to pass the PRO Act without providing a carve-out for independent financial advisors,” said FSI President & CEO Dale Brown. “These advisors, many of them leaving an employee advisor model, choose the independent model because it allows them to better meet the needs of their clients and operate their own business. Independent financial advisors are small business owners and entrepreneurs. They have built their businesses within their communities, helping hard-working Main Street Americans achieve their financial goals.”
While securities laws and regulations require oversight of independent financial advisors by their affiliated broker-dealer, the independent financial services industry has a long history of appropriately classifying affiliated financial advisors as independent contractors.
As the PRO Act moves to the Senate, FSI will continue to strongly advocate for the addition of a carve-out for the independent financial services industry, similar to the one included in California A.B. 5.
“We expected this to be an uphill battle in the House,” noted Brown. “We are now focused on working with the Senate to preserve our financial advisor members’ independence.”
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