Building on Success: FSI’s Advocacy Priorities for the New Year

March 20, 2024

Over our two-decade history, FSI’s mission has remained the same: to create the most business-friendly regulatory environment possible for our members and the broader financial services industry, ensuring that Main Street Americans have continued access to professional financial advice, products and services that help them achieve their financial goals.

When firms and advisors don’t have to spend time and money complying with overly burdensome, and often counterproductive rules, they can better serve investors. That, in turn, results in more and more American families gaining access to financial advice.

Of course, the threats and challenges to accomplishing our mission evolve over time.

To that end, FSI staff, in consultation with our Board and members, fine-tune our advocacy priorities at the top of each year. Here’s a high-level overview of our 2024 priorities.

Issues Impacting Independent Financial Services Firms & Advisors

Independent Contractor Classification

The independent contractor classification of independent financial advisors is a critical aspect of the independent business model. Advisors choose the independent advisor model – many voluntarily switch from an employee advisor model – so that they can better serve their clients. 

Independent financial advisors are small business owners who, inspired by an entrepreneurial spirit, build businesses within their communities. Therefore, one of our top priorities remains defending advisors’ independent contractor status and supporting solutions that provide our members clarity, enabling them to operate their businesses confidently without having to waste significant resources defending their independence.

SEC Rulemaking

The SEC has introduced rules at an unprecedented pace under Gary Gensler’s leadership. Rulemaking, by itself, is not a bad thing. FSI has a long history of supporting common sense rules that offer investors additional protections and improve outcomes for all industry stakeholders. 

Yet, when broad rulemaking happens at a frenzied pace, it prevents the public, including industry experts, from providing thoughtful, meaningful feedback. Notably, it also increases the chances rules will yield unintended consequences that hurt investors. We will continue to engage the SEC to slow down the pace and narrow the breadth of their rulemaking to ensure a more thoughtful and considered approach. 

Additionally, the rise of AI has touched all aspects of everyday life, including the industry’s interactions with clients. The SEC’s Predictive Analytics Rule proposals attempted to address potential conflicts of interest arising from AI but resulted in an overly broad scope capturing technology beyond AI and failing to align with the SEC’s own Regulation Best Interest (Reg BI). Ultimately, we are concerned that the proposals, as written, will have a chilling effect on innovation and the use of technology within the industry, degrading the client experience.

Issues Impacting the Financial Services Industry

Regulation by Enforcement

Financial services firms, financial advisors and investors rely on clear, consistent and predictable regulatory rules. Enforcement activity must not be used to establish new regulatory requirements, also known as “regulation by enforcement.” 

This includes new or evolving interpretations of existing obligations, which should be appropriately done through proper notice and the opportunity to comment. The rulemaking process allows stakeholders to engage in the process and firms and advisors with the transparency and certainty needed to operate their business and protect investors.

Consistent with our recent whitepaper on this topic, we will engage the SEC about this issue and provide them with ways to avoid this regulating by enforcement as opposed to thoughtful rulemaking in the future. 

Issues Impacting Main Street Americans

Standard of Care

We support a standard of care that acknowledges and considers the unique characteristics of the independent financial services model and its ability to provide access to advice for Main Street investors. Independent financial services firms and advisors work within an extensive regulatory regime, and a standard of care should account for existing requirements.

Reg BI meets these goals.

We oppose any regulatory proposals that do not align with it and would create a patchwork of varying and potentially conflicting standards. Therefore, we will continue to vigorously oppose state-level fiduciary standards that go beyond bringing the state’s securities laws in-line with Reg BI and we will continue to fight the DOL’s effort to implement its latest fiduciary rule, which largely mirrors the one that was struck down by a federal court in 2016.

Investor Education and Protection

We support providing financial education to everyone, which would allow more Main Street Americans to realize their financial goals, including financial security in retirement. We must also protect our seniors and other vulnerable adults from financial exploitation. As a result, we will continue to work to advance the Financial Exploitation Prevention Act in the Senate and focus on bringing our members and policymakers together for roundtables and events on financial literacy.

2024 promises to be an active year for FSI. Yet, while the challenges ahead may be daunting, we are confident that we will continue to build on our recent successes and win more advocacy victories on behalf of our members, just as we have for the past 20 years.  

But we’ll need your help. Indeed, when our members supplement our work by actively participating and remaining engaged, the potency of our message grows even stronger and compelling to Congress, regulators and other important stakeholders.

Interested in how you can get involved on Advocacy Priority issues? Please contact our Advocacy Team.

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