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Regulation and Compliance > Legislation

Independent Contractor Status a 'Heavy Focus' for FSI Advocacy

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What You Need to Know

  • FSI filed a lawsuit against the Labor Department for withdrawing its final independent contractor rule.
  • It's possible a ruling in that case will come by year-end.
  • Of the 500 OneVoice conference registrants, 300 were onsite in Orlando.

A “very heavy focus” for the Financial Services Institute’s advocacy efforts this year will continue to be fighting for advisors’ independent contractor status, David Bellaire, FSI’s vice president and general counsel, said Tuesday.

“There’s still an awful lot of work to do on this [independent contractor] issue, but I’d say that our team is cautiously optimistic,” Bellaire told reporters during a virtual briefing from FSI’s OneVoice conference, held in Orlando.

FSI filed a lawsuit on May 13 against the Labor Department for withdrawing its final independent contractor rule and is now actively lobbying senators about a legislative remedy, Bellaire told ThinkAdvisor in a previous interview.

“We think it’s possible to have a ruling in that case by year-end,” Bellaire relayed.

“Independent contractor issues are so critical to our members,” he continued. While it’s not the only advocacy issue FSI is working on, “it’s really a very heavy focus of our advocacy this year.”

DOL’s withdrawal of its independent contractor rule earlier this year makes “it more expensive and difficult [for advisors] to operate in the indie contractor model,” Bellaire said.

FSI also applauds the recent introduction of legislation by Senate Finance Committee Chairman Ron Wyden, D-Ore., The Small Business Fairness Act, which Bellaire said “would allow more financial advisors to take advantage of the pass-through taxation break.”

Robin Traxler, FSI’s senior vice president, policy and deputy general counsel, noted that FSI is working with member firms to “monitor how Reg BI is being examined and enforced so far. If we feel like the SEC or other regulators are engaging in rulemaking by enforcement, we are prepared to engage quickly on that.”

In separate comments to ThinkAdvisor, Traxler explained that “if the SEC’s interpretation of Reg BI evolves as they go through their examination process, we would expect them to provide appropriate guidance or exam findings reports to the industry as opposed to widespread enforcement actions. While we are encouraged by what we have seen in the common exam findings the SEC has issued, we continue to monitor developments as examinations continue.”

Dale Brown, FSI’s president and CEO, noted that FSI’s “advocacy priorities are more critical to our members than ever,” and added that the past 18 months has shown the resiliency and adaptability of the industry since the COVID-19 pandemic struck.

Brown noted that of the 500 OneVoice conference registrants, 300 were onsite in Orlando.

Along with adapting “to a world of digital advocacy,” last year ushered in a change in administrations, Brown noted. “We’ve adapted to deal with a new party in the White House as well as one party control in the Senate and the House and it’s not new for us,” Brown said. “We’ve always worked with both sides of the aisle, [and] will continue to do so … access to advice for Main Street is not a partisan issue. We’re never going to make it partisan even when others might try.”

Pictured: FSI General Counsel David Bellaire


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