NAPFA: 8 Ways FINRA Oversight Will Hurt Indie Advisors

“All advisors, and the American public, should be distressed that this bill would allow the foxes to rule the henhouse. Faced with this reality, NAPFA is sounding the alarm,” the NAPFA statement said. “FINRA’s member firms are some of the Wall Street broker-dealers who so recently created and sold to unsuspecting consumers the credit default swaps and toxic-mortgage-backed securities, which in large part led to the recent financial crisis.”

NAPFA sees eight ways in which FINRA oversight could hurt independent advisors and their clients:

1. FINRA’s “exorbitant operating expenses and bloated salaries” make them more Wall Street than Main Street.
2. FINRA’s mandatory membership fees would put many independent financial advisors who offer advice to middle-class savers out of business.
3. The burden of making small business owners pay mandatory fees to fund FINRA salaries is “unconscionable.”
4. FINRA is not subject to sunshine laws and does not have to hold open meetings.
5. FINRA is not subject to the Freedom of Information Act and is “notoriously secret” about their books and records.
6. FINRA is an organization run by Wall Street’s executives who, with a “wink and a nod,” purport to oversee their Wall Street colleagues. “This is like ENRON overseeing CPAs, or drug companies overseeing your family physician.”
7. FINRA has no experience working with financial advisors held to the high fiduciary standard.
8. FINRA acts like a government authority, but without government accountability.

 “This issue is too important for truly independent, fiduciary advisors—and the American public—to ignore,” said NAPFA national chairwoman Susan John in a statement. “If Chairman Bachus achieves the hostile takeover of small business owners in our industry, he will drive good men and women out of business and harm the consumers they work so hard to serve. NAPFA strongly believes that a properly funded SEC is the best way to ensure investment advisers are truly working in the best interests of those they serve—with accountability and transparency.”

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