The Financial Services Institute said early Tuesday that its grassroots lobbying work has helped to limit requirements set to be imposed on independent contractors in California. As a result, independent broker-dealers and advisors should not face increased compliance burdens and related costs for a bill being finalized by the state legislature, FSI says.
“This is a big win, not only for our California broker-dealers and financial advisors, but for all broker-dealers and advisors in other states that were watching to see what happened in California before they acted,” said FSI President & CEO Dale E. Brown (left) in a press release.
Recent amendments to California Senate Bill 459 removed the notice and record-keeping requirements for all independent contractors in California. Instead, only firms found to have engaged in willful misclassification of independent contractors will have to comply with new notice requirements via a website or office posting.
“This win will hopefully temper any thoughts from other state legislatures about going down a path that will ultimately hurt hard-working Americans’ ability to secure affordable, unbiased financial advice, especially during these hard economic times,” Brown said in the statement. “We thank our numerous broker-dealer and financial advisor members who really stepped up to the plate and took this issue head on from a grassroots campaign effort. We couldn’t have done this without them.”
During the spring and summer, FSI’s government affairs counsel, Matt Schwartz, worked on the group’s advocacy efforts in the Golden State, participating in a coalition of like-minded advocacy groups.
More than 500 FSI members contacted their assembly members to express concerns. In addition to the letter-writing campaign roughly, 25 members volunteered to participate in face-to-face meetings with the lawmakers, which were coordinated through FSI.
FSI began organizing its efforts in the state in June by reaching out to about 2,000 advisors and 18 broker-dealers operating in California to defeat new rules asking broker-dealers to manage and maintain forms for independent- contractor financial advisors.
At the time, the group said SB 459 “would create additional unnecessary costs for the broker-dealer that would be passed on to the financial advisor and/or investors,” and the measure would also increase administrative costs for the state to about $250,000.
Like other states, California has been hoping to raise funds and cope with its budget deficit by looking into the issue of whether or not some workers are being misclassified as independent contractors, according to the advocacy group.