In a short five years, the members of the Financial Services Institute (FSI) have done their jobs well. While the 116 independent broker/dealers that are members of the FSI compete fiercely with each other in many areas–particularly when it comes to the life blood of the independent B/D space, recruiting–within FSI they have subsumed their differences in favor of promoting the common agenda of B/Ds. Those 116 broker/dealers represent 144,000 independent financial advisors, and FSI can also boast of having 12,000 individual advisor members, noted Frank Tauches of American Portfolios, who in addition to holding a seat on FSI’s board also chaired the group’s annual conference which was held in San Antonio in the last week of January.
At the meeting, current FSI Chairman Eric Schwartz, the founder and chairman of Cambridge Investment Research, listed the group’s priorities. Topping the list is Congressional re-regulation of the financial services industry, and in particular the “trend toward a single regulator.” Speaking of which, Schwartz suggested that “the star of FINRA could be rising.” While he stressed that FINRA’s advocacy efforts in Washington had reached Mary Schapiro’s ears while she was running FINRA, and that she was now well aware of the independent broker/dealer business model, he also voiced respect for the new SEC chairman, noting that “we won’t be able to roll over her.”
As for the group’s other priorities, Schwartz said that the Obama Administration, under pressure from its organized labor supporters, was considering changing the IRS’s treatment of the independent contractor model, which could have devastating effects on independent broker/dealers. That would be a focus of FSI’s lobbying, he promised. Finally, Schwartz said that it was important not to take their collective eyes off the FINRA rule book consolidation of NYSE Regulation and NASD.