More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
When the good folks at AdvisorOne asked me to start blogging twice a month, while obviously flattered, I thought to myself: would I really have enough to say every other week? Then, I came back to reality, realized how incredibly busy the Financial Services Institute (FSI) has been over the last year, and figured out my bigger problem would be prioritizing everything we have to report, not trying to find something to report.
This past year, to say the least, has been one of great growth and transformation for FSI. With a mission of creating a healthier, more business-friendly regulatory environment for our independent financial services firm and independent financial advisor members to thrive, FSI is staying incredibly busy, especially with Washington, D.C. unfortunately becoming all too influential in our industry.
2011 was a watershed year in so many ways. We achieved critical victories on issues that have direct consequences for our industry and for American investors:
- We won a temporary reprieve in the Department of Labor’s misguided effort to expand their definition of fiduciary such that average Americans would have a difficult time finding affordable advice for their Individual Retirement Accounts. Crucial to that effort was FSI members’ help in mobilizing and energizing over 5,000 advisors to write personalized letters to President Obama bringing real-life consequences to a process being made in a bubble.
- FSI’s influence was also clearly seen in the important debate on harmonizing broker-dealer and investment advisor regulation, as our 2011 chairman, LPL’s Bill Dwyer, testified before the House Financial Services Committee.
- Through the strong support of FSI member firms and thousands of financial advisors, we successfully amended an onerous independent contractor bill debated by the California legislature.
We also experienced dramatic membership growth in 2011. More than 40 FSI member firms are now partnering with us to communicate the importance and value of FSI to their advisors. The result of these partnerships is that we more than doubled our financial advisor membership to over 33,000 at the close of last year. And I’m pleased to say we are now over 35,000 and growing.
But complacency will not be in our vocabulary in 2012. We are building an even stronger team of experts
Ultimately, the key to our success is a large base of members actively and personally engaged in advocacy in partnership with FSI. We will never have as much money as our friends and competitors on Wall Street. We don’t have the simple sound bite for the media that our fee-only colleagues have. And depending on the outcome of the elections, we may or may not grow our friends in high places.
Instead, our competitive advantage is the compelling story of independent financial advisors helping clients in communities all across America with their Main Street financial goals: a dignified retirement; help in saving for their children’s college education; taking care of aging parents; and, more in more these days, simply figuring out their finances to make ends meet.
One thing is clear in 2012: A powerful, aggressive and successful FSI has arrived. Keep an eye on this space throughout the year to stay apprised on our progress and visit www.financialservices.org and follow @FSIWashington on Twitter to learn more about FSI.