A day after legislation was introduced that would freeze the budget of the Securities and Exchange Commission, Jude Boudreaux was on Capitol Hill meeting with one of his senators about legislation that would help the agency fund investment adviser exams.
Mr. Boudreaux, founder of Upperline Financial Planning in New Orleans, flew to Washington for the sole purpose of talking with Sen. David Vitter, R-La., a member of the Senate Banking Committee.
He jumped at an opening on Mr. Vitter's schedule to come in and pitch a bill that would authorize the SEC to charge investment advisers user fees to finance examinations.
User-fee legislation has been introduced in the House by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee. Mr. Boudreaux's meeting with Mr. Vitter is part of an effort by the Financial Planning Coalition and other user-fee advocates to get a Senate bill introduced.
“This [meeting] came up on very short notice,” Mr. Boudreaux said. “It's a unique opportunity if we get a chance to sit down with the senator and have this discussion as a constituent.”
Mr. Boudreaux said he got a good reception but no commitment from Mr. Vitter to support a Senate bill.
“They're obviously interested in doing what's best to protect investors,” Mr. Boudreaux said. “They're open to solutions.”
The Financial Planning Coalition, comprised of the Financial Planning Association, the National Association of Personal Financial Advisors and the Certified Financial Planner Board of Standards Inc., tapped Mr. Boudreaux because he has been deeply involved in advocacy work.The coalition and Mr. Boudreaux shared the cost of the trip, he said.
“Jude is acutely up on all the issues, and it made sense for him to come up as a constituent to talk with the senator about issues surrounding a user-fee bill,” said Karen Nystrom, FPA director of advocacy.
In the waning days of the congressional session, the FPC and other groups are working Capitol Hill to generate momentum for user-fee legislation. It is too late for a measure to work its way through the legislative process, but the more support advocates garner now, the stronger position they'll be in to re-introduce bills in the new Congress next year.
“There have been regular meetings with a broad variety of folks on the Senate side,” said Neil Simon, vice president of government relations for the Investment Adviser Association. “We are still working to get a bipartisan bill introduced in the Senate.”
The timing of Mr. Boudreaux's meeting was notable because earlier this week a so-called
continuing resolution was introduced in the House that would keep the government running through Dec. 11 by maintaining agency funding at its current level. Without such a measure, the government would shut down at the end of fiscal 2014 on Sept. 30.
The continuing resolution would force the SEC to carry on with a budget it says does not allow it to meaningfully increase adviser oversight. The agency currently examines annually about 9% of the 11,405 registered investment advisers.
Investment adviser groups strongly favor
user fees over other ideas for boosting SEC oversight, such as establishing a self-regulatory organization for advisers or allowing independent third parties to exam advisers.
Some advisers question the user-fee solution.
Tom Dickinson, president and chief investment officer at Middleton Dickinson Capital Management, said that charging a user fee based on assets under management would put a financial strain on his firm because it's not a typical RIA that generates most of its income from fees based on AUM. His firm works with large corporations to manage their cash in separately managed accounts.
“We're in a different niche than most [RIAs] are,” Mr. Dickinson said. “We do not work with retail clients. The industry is not monolithic. I want to make sure the business models of some specialty RIAs are also taken into consideration.”
Ms. Waters' bill provides a number of criteria on which to base the user fee beyond a charge on AUM.
Mr. Boudreaux encouraged other advisers to weigh in with lawmakers on industry oversight.
“These rules are going to be made with or without us,” he said. “It behooves all of us to be part of this process.”
