FSI Urges New Jersey Senate Committee to Advance Bill Protecting Independent Financial Advisors’ Business Model

Testimony underscores the need to preserve advisors’ independent contractor status 

The Financial Services Institute (FSI), the leading advocacy organization for independent financial services firms and independent financial advisors, today submitted written testimony to the New Jersey Senate Budget and Appropriations Committee in support of S2782, legislation that would clarify the choice of independent contractor status for certain licensed or regulated professionals, including financial advisors. 

FSI’s testimony urges state lawmakers to advance the bill to provide certainty for the independent financial services industry, which remains exposed to potential challenges to advisors’ classification under the New Jersey Department of Labor and Workforce Development’s (NJDOL) final independent contractor rule. NJDOL adopted the rule on May 5, and it was published on June 1. While the final rule includes some modification to the original proposal, it still fails to adequately account for firms’ and advisors’ thorough compliance with supervision obligations under securities laws. 

Independent financial advisors choose independence—many of them voluntarily switching from an employee advisor role—to better serve clients in their communities. They operate their own businesses, build their own client relationships, pay their own taxes, and hire their own staff. S2782 would provide needed clarity for independent financial advisors and the firms that support them and ensure New Jersey investors continue to have access to professional, objective financial advice.

Key points from FSI’s written testimony: 

• S2782 would help ensure the NJDOL’s independent contractor rule does not cause undue uncertainty or lead to the misclassification of financial services professionals. 

• The NJDOL’s recently adopted ABC test for independent contractor status unnecessarily codifies regulatory rigidity and creates greater uncertainty for New Jersey businesses and workers, particularly independent financial services professionals. 

• A 2025 survey conducted by FSI and Oxford Economics found that only 11% of New Jersey independent financial advisors would accept employment with a financial firm if they were not able to keep their independent contractor status. 

• Independent financial advisors have chosen the independent contractor model for the freedom and flexibility to build their own business. An independent advisor’s business is an asset that would be lost if the advisor is classified as an employee.

“We appreciate the opportunity to provide testimony on this crucial issue threatening independent financial advisors and the New Jersey investors they serve,” said FSI President & CEO Dale Brown. “Our members rely on their independent contractor classification to provide flexibility in the products and services they offer, allowing them to better serve their clients. While we were hopeful the final rule would address our concerns and those expressed by independent financial advisors from across New Jersey, unfortunately, the NJDOL’s rule still falls short of providing the clarity we need. We remain committed to preserving our members’ independent contractor status, and we look forward to working with lawmakers on a solution that preserves advisors’ ability to choose independence.” 

Click here for FSI’s full testimony.