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 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.
This is the eighth year that Dale Brown has been on the IA 25 list. It also marks the 10th year that FSI, the advocacy group for the independent broker-dealer industry, has existed. By day, the members of the FSI are fierce competitors in business, which is essentially recruiting and retaining registered reps. So how does Brown keep these rivals cooperating with each other as part of a membership group, even one that’s growing in both numbers and influence?
“Over 10 years we’ve had a laser-like focus on advocacy,” responded Brown, “and within that overall mission we make sure we’re working on issues that matter to our members and doing so in a constructive way.” That, he said, is “why so many [IBD] CEOs have laid aside their competitiveness to work on their common goals in the regulatory environment.”
So who are the regulators that FSI is trying to influence? Yes, it’s the SEC and FINRA and the DOL, Brown said, but “the states are important for our members” as well, and FSI has “made it a priority to deepen our engagement” with state regulators and legislators “to build on our strong foundation.”
Since this is a congressional election year, Brown doesn’t expect much action in Congress through the end of the year, but even as some key members of Congress who oversee financial services retire, he said, “we’ve got to stay engaged. We invest in building relationships, and from time to time we see folks move on, so we start with somebody else.” FSI isn’t partisan, either. “We’ve made sure that we build relationships across the party spectrum,” in both the House and Senate, Brown said, with both “committee chairs and with new members.”
FSI has been “engaging with FINRA, making suggestions on how they can improve” and expressing FSI members’ concern, for example, on FINRA’s CARDs concept proposal (under which BDs and clearing firms would provide account information and activity to the regulator), while “deepening our relationship with state regulators,” both individually and by working with NASAA, the association of state securities regulators.
Brown believes that FSI has a “very constructive, ongoing relationship” with FINRA, and one that “often results in positive changes.” While there is a “naturally built-in tension” with FINRA as FSI members’ principal regulator, “we can work toward making things better for everybody.”
FSI is halfway through executing a five-year strategic plan that includes a core strategy of “resource growth and member engagement,” with a focus on growing membership for individual financial advisors (now at 35,000). FSI successfully held its first in-person conference for its advisor members last September, and announced then a new social network for members called FSI Social.
The member firms “have supported us with their dollars to pay higher dues over time,” Brown reported, and to subsidize membership dues for FAs. Brown said that over the next year “we’ll be working with the board to work on the next phase” of the plan. “What do we need to be an effective advocate? We need more resources and to deepen member’s engagement in advocacy.”
One example of that engagement, he said, is “getting members to meet with members of Congress in their own districts; we need to make more progress there.” Brown said his goal is that “every member of Congress knows who the financial advisors are in their district. That doesn’t happen overnight; we’ve got more work ahead of us.” Another example of FSI’s investment in member engagement is the “thorough upgrade of our technology” at FSI, including a revised website and a member mobile app, “all of which is designed to make it easier and more effective to be engaged.”
Addressing the demographic issue of the aging advisor force, Brown noted that there were “numerous sessions at FSI OneVoice,” the member firm’s annual meeting held this past January in Washington, on succession planning and how IBDs are serving the next generation of clients. “My expectation,” Brown said, “is that we’ll focus on this issue in our strategic plan for the next five years.”
(Check out Investment Advisor's full IA 25 for 2014 list on ThinkAdvisor.)