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More Advisor Exams Loom

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While boosting oversight of advisors via user fees, third-party examiners or a separate self-regulatory organization was dead politically this year, none of those issue has gone away, says Brian Hamburger, CEO of MarketCounsel, and more advisor exams are likely on the horizon.

All three of those issues “continue to be at the forefront of discussions” on how to increase RIA oversight, Hamburger says.

But he argues that “quantifying” the exam problem must take place first. “There seems to be some baseless assumptions that advisors need to be examined as frequently as broker-dealers. No one has really analyzed what the proper frequency of [advisor] exams is,” he says. “We’re already engaged in dialogue about how best to examine advisors without quantifying the problem. It’s kind of dangerous how we have skipped an important part of that dialogue.”

What’s more, while the Dodd-Frank Act increased the threshold for SEC advisor registration to $100 million, which is “a nice stepping-off point,” Hamburger says, “regulators will have to take another look at and increase [that threshold] again.”