State regulators are bracing for an onslaught of investment advisers who will have to register with them for the first time next year
State regulators are bracing for an onslaught of investment advisers who will have to register with them for the first time next year.
Under the Dodd-Frank Act, states — instead of the Securities and Exchange Commission — will have jurisdiction over investment advisers with up to $100 million in assets under management, instead of $25 million.
The rule change means that states will take on an additional 4,200 financial advisers, according to industry estimates.
Local regulators are working on their own and together to make the process as easy as possible for advisers, Joseph P. Borg, director of the Alabama Securities Commission, said during a panel discussion last week at the Financial Planning Association conference.
By spring, state regulators will have access to a database that will allow them to look up advisers in other states. Despite reports that it is taking up to four months for advisers to get their registration approval, Mr. Borg said that in Alabama, it takes an average of 10 days.
To make sure it is ready for the hike in applications, Alabama has already hired three more agents and expects to hire another eight, for a total of 57 agents. The state is putting these agents through weekly training sessions on issues such as money laundering, Mr. Borg said after the panel discussion.
Advisers can expect that the states will be more hands-on than the SEC in terms of overseeing smaller advisory firms.
“Consumers call us when something is wrong,” Mr. Borg said. “The last thing I need is for the upset person calling to be the governor's brother-in-law.”
E-mail Jessica Toonkel at jtoonkel@investmentnews.com.
