Regulations Impeding Client Access to Investment Advice, Products and Services 

During the current administration, we have experienced an uptick in rules and regulations that introduce added administrative burdens and extra costs for firms and advisors.  

That’s a problematic development by itself. But it becomes even more of an issue when you consider the potential fallout for clients, who could end up having less access to investment advice, products and services.   

This dynamic is what makes the stakes this year so meaningful. In fact, in an era when regulators have become especially active, 2024 is a year like no other, making it hard to overstate the significance of what happens over the next few months.  

The biggest challenges come from the Department of Labor (DOL). In April, it finalized a new fiduciary rule, redefining who qualifies as an “investment advice fiduciary” under ERISA. In the lead up to that, we worked hard to thwart this effort, issuing a call to action, urging our members to send a letter to their representatives in Congress and the DOL to explain how the new rule will negatively impact you and your clients.  

Many of your responded to that call. Unfortunately, our deep reservations – which reflected the views of the broader industry and many investors across the country – fell on deaf ears, with the DOL finalizing the Rule anyway.  

Notably, it came after the administration, just after the proposal was introduced, called commissions “junk fees.” Not only do we strongly dispute that notion, but the rule itself is flawed in a variety of ways.  

For one, it will risk making it harder for investors to work with an advisor. It also attempts to sidestep a 2016 federal court ruling that vacated a very similar proposal. Finally, it’s the product of a rushed rulemaking process, which left the Department with less time to review the thousands of comments it received from the public.  

A bipartisan group of senators recently introduced a joint resolution to stop the Rule’s implementation under the Congressional Review Act, while the rule is currently being challenged in the courts. Because of these developments, we remain hopeful the Rule will never be fully implemented.  

Meanwhile, the DOL’s independent contractor rule, released in January, is another significant cause for concern. While we are not the target of this proposal, the implications for the industry are enormous.   

Independent financial advisors, including tens of thousands of our financial advisor members, choose the independent model so that they can operate their own businesses and best serve their clients as they see fit. Many have even switched to the independent model after working as an advisor employee at a financial services firm.  

Millions of Main Street investors could see limited access to advice if that freedom of choice eventually gets taken away. We have repeatedly communicated this to the Department. Even so, the final rule was released in January.  

FSI, with coalition partners, has already sued the DOL challenging both of these rulemakings. Going forward, we stand ready to use all the tools in our advocacy toolkit to fight for a regulatory environment that works well for our members.  

To continue these efforts, we need your help. Respond to our calls to action, rally fellow members and explain the potential stakes to your clients so they can get involved, too. There’s a limit to what we can do individually, but we can accomplish so much together.