More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
The Financial Services Institute started 10 years ago “because of need … our members needed a voice” in Washington, Dale Brown, president and CEO of FSI, told reporters at an early Tuesday morning briefing at the OneVoice2014 conference in Washington.
FSI “filled that void and our members saw the potential that we were going to survive and be credible,” Brown said. Since launching a decade ago, advisor and broker-dealer members “have gotten on board in a big way.” Indeed, this year’s OneVoice, FSI’s conference for its broker-dealer members, drew nearly 800 attendees.
Brown credits FSI’s success in growing its membership — which now includes 37,000 advisors and more than 100 BD firms — to its laser-focused mission. “From day one” FSI has had a “clear focus of advocacy,” Brown said. “We aren’t trying to compete with other organizations” in the advisor and BD space. “Our core focus is advocacy — that clarity of mission has been critical.”
Among FSI’s 2014 advoacy priorities for 2014 is “improving” BDs’ primary regulator, the Financial Industry Regulatory Authority," said David Bellaire, FSI’s executive vice president and general counsel, at the briefing. FSI not only wants to see “greater efficiency” in FINRA exams and in the arbitration process, but it wants to see the self-regulator use cost-benefit analysis in rulemaking.
“Our members are deeply frustrated on a variety of fronts; they feel the compliance burden is real and has consequences for their clients,” added Brown.
“Later this year, FSI will publish a white paper proposing a number of improvements to FINRA's arbitration system,” Bellaire said.
Added Brown: There needs to be “greater transparency in FINRA’s finances and cost-benefit analysis.”
FINRA CEO Richard Ketchum told lawmakers in a Jan. 6 letter that the self-regulator is now developing rule changes that would prohibit settlements conditioned on an investor’s agreement not to oppose the expungement of brokers' black marks from FINRA’s BrokerCheck.
Ketchum told Sens. Jack Reed, D-R.I., and Charles Grassley, R-Iowa, that “while the suggestion to include such conditions in exchange for additional compensation does not always originate with the brokerage firm or broker, this practice may interfere with arbitrators' ability to independently determine the appropriateness of expungement and make the requisite affirmative finding.”
Other priorities include building relationships with members of Congress and other policymakers, Bellaire said. “Being an election year, members of Congress will be more open to meeting with our members.”
Also on FSI’s agenda will be to continue to expand its efforts and outreach to state legislatures and regulators, Bellaire said, as well as to ensure that the anticipated reproposal later this year of the Department of Labor’s fiduciary rule doesn’t “limit investor access to advice.”
FSI has been a staunch opponent of DOL’s fiduciary rule, but Bellaire says that he believes DOL has been listening to FSI’s concerns. “I don’t think DOL has much choice in not listening to us” as members of Congress have the same concerns.
Two potential outcomes of a reproposal that would satisfy FSI, Bellaire said, would either be no proposal or “one that is very narrowly drawn.”
Mike Mungenast, CEO and President of ProEquities Inc. and FSI’s 2014 chairman, said at the media briefing that FSI “couldn’t have gotten to where we are without the 37,000 advisor members,” and that FSI would like to see that number reach 40,000 soon. “I’d like to see [FSI] deepen our engagement of advisors, get them more on board and engaged.”
Indeed, FSI’s “accelerated growth” in the past few years is “not by accident,” Brown added, as FSI has a five-year strategy focused on resource growth and membership engagement.
In FSI’s second decade, “we have strong momentum, but lots of challenges,” Brown said. “Our members need change now, as the regulatory environment is challenging.” FSI will work “for a lot of incremental change, small steps this year that will lay the foundation for coming years.”
Check out With 10 Years’ Experience, FSI Flexes Its Advocacy Muscles on ThinkAdvisor.