The political world is still responding to the monumental and unexpected change we saw at the end of 2016, as the Republican party — led by
now-President Donald J. Trump — took control of the White House and both houses of Congress. Our early communications with the transition team and, now, the new administration indicate that they and their allies in Congress are likely to be much more responsive to the voice and concerns of independent financial firms and advisers in the years ahead.
Given the substantial questions that still surround the
Department of Labor's fiduciary rule and other regulatory and legislative measures that stand to impact our industry — from
state-run retirement plans for private sector workers to ongoing challenges to the independent contractor business model — many advisers and other industry members are greeting this change in our nation's leadership with a sigh of relief.
In many ways, it seems we may have narrowly averted a wave of burdensome new regulations that could have permanently undermined advisers' ability to serve their clients, and crippled their effectiveness in helping investors achieve their financial dreams.
While FSI is optimistic about the possibilities that have emerged for a stronger working relationship with the new administration, we also have a message for our members and other advisers across the country: Now is not the time to become complacent. The work towards a more business-friendly regulatory environment continues, even if the blueprint outlining our efforts may have changed.
(More: As Donald Trump takes office, watch for action on these adviser issues)
In 2017, we will be pursuing a more aggressive advocacy agenda, designed to move regulation of our industry closer to the way our members want their businesses to function in the future. One thing that has not changed, though, is that without the active involvement of advisers and other industry members across the country, these advocacy efforts will fall short.
We believe the most crucial regulatory and legislative changes for our industry's clients will lie in the following areas:
1. Preventing financial exploitation of seniors. We will strongly support state and federal measures that help advisers protect their clients from financial exploitation without violating privacy obligations or exposing them or their firms to liability.
2. Expanding access to ABLE Act accounts. The ABLE Act creates opportunities and protections for disabled workers and the families of children with disabilities to save and invest for retirement. We will work to expand access to these crucial accounts.
3. Supporting a fiduciary duty. Strongly support the adoption of an SEC-developed fiduciary duty for financial advisers affiliated with broker-dealers who provide advice to retail investors. The fiduciary duty should protect clients' choice among financial advisers, products, services and the means of compensation.
(More: The most up-to-date FAQs on the DOL fiduciary rule)
The most significant issues for independent financial services firms and their advisers will lie in these areas:
1. Making possible the payment of commissions to ensemble practices. Our industry must work toward the rational payment of commissions and other revenue to financial advisers' business entities in order to facilitate efficient business operations and compliance with tax laws.
2. Establishing a level playing field. Harmonizing regulation of broker-dealers and investment advisers must be a key priority for our industry and our clients. In 2017, we will continue to push for this goal by supporting
consistent third-party exams, a uniform fiduciary standard of care, and other harmonized regulatory requirements.
3. Achieving permanent protections for the independent contractor business model. In the year ahead, we will work even harder to obtain a permanent fix to prevent unwarranted legislative and IRS scrutiny of the independent contractor business model, which is vital both to thousands of advisers across the country and their clients.
Issues of significant concern to the financial services industry include:
1. Establishing a common-sense standard of fiduciary duty. FSI strongly supports the adoption of an
SEC-developed fiduciary duty for financial advisers affiliated with broker-dealers who provide advice to retail investors. As mentioned above, the fiduciary duty should protect choice and flexibility for clients in choosing an adviser, as well as the products, services, and compensation models they utilize.
2. Securing adoption of the Financial CHOICE Act. FSI will continue to work to ensure implementation of the Financial CHOICE Act or other legislative solutions that are designed to preserve access to and choice among financial advisers, products, and services while reducing the impact of regulation on advisors' ability to serve their clients.
3. Opposing state-run or city-run retirement plans for private sector workers. We will continue to oppose legislative efforts to establish retirement programs run by states or local government entities that deny clients the benefit of financial advice and compete against independent financial adviseers.
The changes in our political climate in 2017 present new and compelling opportunities for advisers and other members of our industry to reshape the regulatory framework that impacts their firms and clients for the better.
(Related read: FSI renews efforts to scrap DOL rule and push for universal standard by SEC)
As every successful advisor knows, however, no one ever capitalized on an opportunity by sitting on the sidelines. We urge advisers and other members of the industry to begin 2017 by renewing their commitment to advocacy, both for the long-term health of their clients, and their businesses.
Dale Brown is president and CEO of the Financial Services Institute.
