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Regulation and Compliance > State Regulation

FSI Boosts State-Level Lobbying Efforts

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With a political climate in Washington favoring deregulation, the Financial Services Institute says it had a good 2017 and sees positive momentum for 2018 — at least at the federal level.

“We delivered meaningful results for members last year by taking advantage of what was created by change in the administration and Capitol Hill,” said FSI President and CEO Dale Brown on Tuesday at the group’s annual OneVoice conference taking place near Dallas. “Our priority now is getting a Department of Labor fiduciary rule that is workable for our members and their clients.”

The organization — which has about 40,000 independent-advisor members — is pleased with the 18-month delay it helped secure for the rule and plans to keep working with the Securities and Exchange Commission on shaping a uniform standard. But as states consider what they can do with a regulation-unfriendly Washington, FSI says it will renew its efforts at this level of government.

“We track over 300 bills nationwide at the state level and had influence on several issues,” Brown said during a media briefing.

He and other FSI officials see more work — much more work — ahead. “In 2018 and beyond, we will see more and more activity at the state level that can impact mainstream investors and their advisors,” he explained, adding that the group has “added staff resources” to help it address this challenge.

Still, it does not plan to tackle every insurance issue taking place in the 50 states.

“We have to narrow our focus, pick and choose on the insurance issues we engage in,” said General Counsel David Bellaire. “Other trade organizations devote resources to this … [and] we do not intend to be the insurance trade organization. We will continue to pursue a [single] best-interest standard and file letters of engagement with … the states.”

FSI’s leaders praised SEC Chairman Jay Clayton for narrowing the agency’s scope and note that it is doing the same. “We focus on a limited [number of] issues that are most … impactful, and add our voice without putting a heavy burden on our members’ resources,” Bellaire explained.

“We are concerned with the patchwork quilt of … standards … that vary from state to state, account to account, product to product, etc.,” he said. “It’s not helpful … DOL took two standards of care and multiplied it to six.”

FSI Network, Scope

To boost its efforts, FSI recently hired Claudia Salinas from USAA to serve as its director of political affairs. A big part of her task is to “deepen engagement” between advisors and their political representatives, according to Brown.

“It’s a new role that goes beyond letters and calls [from] our members and Congress,” Bellaire said.

Bellaire says the group remains committed to a fiduciary rule and a best-interest standard for its members, which it is pursuing in cooperation with the SEC. “We did meet with [SEC Chair Jay] Clayton earlier in year … and are glad to see that hard work coming to fruition,” he added.

At the state level, Bellaire said, FSI has pushed for private-sector solutions to resolve the need for more retirement plans: “Six states … have had results in this area, and [we] are working in more.”

Other areas of focus for the organization include the issue of outside business activities (OBAs). It issued a white paper on the topic in 2017.

“There are federal and state concerns” with OBAs, said Bellaire. “The white paper tries to demystify this.” The Financial Industry Regulatory Authority, he adds, also is looking at this topic.

In addition, the group also will focus more in 2018 on working with FINRA on unpaid arbitration claims. “We want to understand the size and nature of the problem,” Bellaire said.

“FINRA is pulling together information on this and will recommend changes; we are anxious to see [what] they put together,” he explained. “We don’t want to see advisors and firms running good businesses… [bearing the] burden for the cost of those who have harmed investors and leave the industry.”


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