An Overview Of FSI’s 2024 Advocacy Priorities

The Independent Contractor Classification, SEC Rulemaking, Regulation By Enforcement, Standard Of Care, And Investor Education And Protection
Dale Brown, President and CEO, Financial Services Institute
Dale Brown, President and CEO, Financial Services Institute

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 redirect those resources to serve investors. That, in turn, results in more American families gaining access to financial advice.

Of course, the threats and challenges to 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 an overview of our 2024 priorities.

1. Issues Impacting Independent Financial Services Firms & Advisors

Independent Contractor Classification. The independent contractor classification of financial advisors is a critical business model for the industry. Advisors choose this model so that they can better serve their clients. Many voluntarily switch from an employee advisor model to be able to do just that.

Independent advisors are small business owners who build businesses within their communities, inspired by an entrepreneurial spirit. Therefore, defending their independent contractor status and supporting solutions that provide our members with clarity remains one of our top priorities. This can enable them to operate their businesses confidently, without having to waste significant resources in efforts to avoid becoming classified as employees.

SEC Rulemaking. The SEC has introduced rules at an unprecedented pace under Chair 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. It also increases the chances of rules hurting investors through unintended consequences. We will continue to engage the SEC to slow down the pace and narrow the breadth of its 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 they have 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.

2. Issues Impacting The Financial Services Industry

Regulation by Enforcement. All financial services firms, advisors and investors rely on clear, consistent and predictable regulatory rules – whether they use an independent model or an employee model. Enforcement activity must not be used to establish new regulatory requirements, which is known as “regulation by enforcement.”

This includes new or evolving interpretations of existing obligations, which should provide both proper notice and the opportunity to comment. The rulemaking process allows stakeholders to engage regulators on crucial points – before enforcement occurs – and gives firms and advisors the transparency and certainty needed to operate their business and protect investors.

Consistent with our recent white paper on this topic, we will engage the SEC about this issue and provide them with ways to avoid regulating by enforcement, and instead approach rulemaking in a more thoughtful manner.

3. 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 Reg BI.

Dale Brown, President and CEO, Financial Services Institute

We oppose any regulatory proposals that do not align with Reg BI, which would create a patchwork of varying and potentially conflicting standards. 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. While the challenges ahead may seem 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. When our members supplement our work by actively participating and remaining engaged, the potency of our message grows even stronger and more compelling to Congress, regulators and other important stakeholders.

Interested in how you can get involved on Advocacy Priority issues and FSI? Please visit financialservices.org.

Dale Brown is the President and CEO of the Financial Services Institute.

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