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July 06, 2012 at 06:58 AM
On June 6, I testified before the House Financial Services Committee on H.R. 4624, the Investment Adviser Oversight Act of 2012. H.R. 4624 is the bill that was introduced a few weeks prior to the hearing by Rep. Spencer Bachus (R-Ala.), who chairs the House Financial Services Committee. It authorizes the SEC to designate one or more “national investment adviser associations” that would have broad authority to regulate and inspect thousands of investment advisory firms. As such, the bill is tailor-made for FINRA (formerly NASD and NYSE Regulation), the self-regulatory organization (SRO) for broker-dealers, as I’ve blogged about before for AdvisorOne.
FINRA is lobbying hard to expand its turf to investment advisory firms. It is using its vast resources to convince members of Congress to support the Bachus SRO bill. FINRA is using its very highly compensated staff, as well as the services of many influential outside lobbyists (including Michael Oxley, the former chairman of the House Financial Services Committee). FINRA also is being supported by broker-dealer and insurance groups that know how to use their money, clout and active grassroots programs to support their legislative agenda.
But thanks to many investment advisory firms, as well as other groups and organizations, we have had some success in making our voices heard on Capitol Hill. While our work is far from done—and, in fact, we continue to fight an uphill battle— it is heartening to see more investment advisors than ever helping to educate members of Congress and their staffs about these important issues. During the 15 years I have been working for the Investment Adviser Association (IAA), this is the most prolific and concerted effort by the investment advisory profession on any legislative issue I have ever witnessed.
The IAA’s membership consists of SEC-registered investment advisory firms, and we have encouraged all IAA members to contact members of Congress, particularly if they have a connection with a member of the House Financial Services Committee. Our members have responded by sending emails, making phone calls and meeting with their elected representatives.
The Financial Planning Coalition, which consists of the CFP Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors, has led a similarly effective grassroots effort. The North American Securities Administrators Association (NASAA), which represents state securities regulators, also testified in opposition to H.R. 4624 at the June 6 hearing and maintains an active presence on Capitol Hill. Other groups, including the personal financial planning section of AICPA, have been helpful in opposing FINRA and supporting investment advisor user fees as an alternative.
