In recent months, so much attention has been devoted to the midterm elections and how the potential shift in the balance of power in Washington, D.C., could affect our industry. And for good reason.
But it’s important never to lose sight of what happens at the state level, which can have as much – or more – of an impact on how our members do business and serve clients. It’s why we spend time and effort on state and local issues in addition to federal level policies.
Looking back on 2022, we had several notable advocacy successes in statehouses around the country. Here are a few that produced positive outcomes for our members.
Kentucky proposed a 6% sales tax on nearly 40 services early in the year. Lawmakers included wealth management on this list. Immediately, we went to work to exclude it, reaching out to our contacts in the state to let them know how a levy like that could erode the personal investments of millions of Kentuckians. Ultimately, lawmakers removed wealth management from the list of targeted services – one of only three industries to achieve such an outcome.
With increasing calls for consumers to have more control over the use of their personal data that companies collect, we have advocated for maintaining the current national standards for the financial services sector that have effectively protected consumers for two decades. It is important that proposals avoid unintended consequences that could adversely affect our members. When such proposals arise, we push back, and in Florida, we did just that, defeating a consumer data privacy bill that included a private right of action that did not contain a satisfactory carve-out for the financial services industry.
Meanwhile, financial literacy has become foundational to our mission of making sure that every investor who wants financial advice can get it. To that end, we lent our support to a Florida bill requiring high school students to take a financial literacy and money management class. During our state capital day at the Florida statehouse, we promoted its passage. Once it passed, we urged Gov. Ron DeSantis to sign the bill, which he did in March.
This Florida effort follows a similar outcome earlier in the year in Ohio. There, we successfully supported a bill mandating financial literacy curriculum in high schools.
Independent contractor classification issues are not just a national concern. New York has been considering legislation that would have amended the definition of “employment” using an ABC test that makes workers employees unless they meet certain conditions. At the time, we knew that an ABC test in this instance could result in the reclassification of independent financial advisors. Working with FSI members, we educated lawmakers in the state about the unique character of our industry, letting them know that our members prefer, and freely choose, to serve their clients by operating independently. The legislation did not advance.
A similar proposal was introduced in Minnesota. As was the case in New York, the Minnesota measure did not advance in this year’s session.
When it comes to the states, nothing is ever settled. Indeed, regardless of the successes we experienced this year, we expect many of the same issues to come up again in 2023, whether it’s consumer data privacy, financial transaction taxes or independent contractor concerns.
Whatever the case, we will continue to push for outcomes in the states that are not only fair to our members but consistent with our mission of ensuring that all individuals have access to competent and affordable financial advice, products and services.