Each January, we release our advocacy priorities. While some of them carry over from year to year as we seek to make continued progress on an issue, new ones invariably get added to address regulatory shifts and other industry changes.
Our team takes its time to develop the priorities, considering several factors, including the political landscape in each state and at the federal level, which helps to inform whether our objectives are achievable. We also lean on our advocacy team’s expertise and keen knowledge of the issues.
But perhaps most importantly, we maintain close contact with our members, who share their concerns with us and those of their Main Street investor clients. This process helps us focus our resources on issues that directly impact those stakeholders and the financial services industry as a whole.
The following are our priorities for 2025:
Issues Impacting Independent Financial Services Firms And Independent Financial Advisors
Independent contractor classification: Independent financial advisors choose to operate as independent contractors, many voluntarily switching from an employee-based advisor position to the independent model to better serve their Main Street American clients. Independent advisors are small business owners who, inspired by the entrepreneurial spirit, build their businesses within their communities, hire staff, dictate their own business practices, pay operating expenses and rely on their business’ success.
We are dedicated to preserving advisors’ choice to be independent contractors and support solutions that offer our members clarity so that they can operate confidently and not waste significant resources defending their worker classification decisions.
Regulatory modernization: The need for regulatory modernization is paramount in our ever-evolving world with rapid technological advancement and current investor expectations. Existing rules and guidance must be updated to reflect contemporary business models and practices, and regulators need to address the incorporation of new technologies such as digital communications, automation and AI.
Regulators need to address the incorporation of new technologies such as digital communications, automation and AI.
We’ve identified three key areas for regulatory modernization: antiquated rules and practices, technological enhancements to client services and access to evolving products and services. Modernized regulations will allow firms and financial advisors to operate more effectively by providing the level of service and customer experience many expect in today’s environment.
Issues Impacting The Financial Services Industry
Regulation by enforcement: Financial services firms, financial advisors and investors rely on consistent, predictable rules governing the regulatory road. Enforcement activity must not be used to establish new regulatory requirements, also known as “regulation by enforcement.” This includes new or evolving interpretations of existing obligations, which should be appropriately done through notice-and-comment rulemaking.
The rulemaking process provides stakeholders with an opportunity to express their views about regulatory proposals, and it gives firms and advisors the transparency and certainty needed to operate their businesses and protect investors. Our 2024 white paper, “Recommendations to the SEC to Modify its Procedural Framework to Prevent Regulation by Enforcement,” outlines concrete procedures for the SEC to adopt to detect and prevent certain unfair enforcement practices.
Issues Impacting Main Street Clients
Tax treatment of investments: With rising costs and the looming retirement savings crisis, we support policies that promote saving and make investing and financial advice more attainable for Main Street Americans. We urge lawmakers to restore the tax deductibility of advisory fees – and expand the tax incentives for financial advice – to aid hard-working Americans in accessing the professional financial advice and guidance needed to help them achieve their financial goals.
Standard of care: We support a standard of care that acknowledges and accounts for the unique characteristics of the independent financial services model and its ability to provide Main Street Americans with access to financial advice. Any new standard should account for the existing extensive regulatory regime within which the industry operates, including the SEC’s Regulation Best Interest (Reg BI) requirements.
Proposals should provide clear, consistent requirements that align with current regulatory rules in order to prevent a patchwork of varying and potentially conflicting standards. These are among the reasons why we have challenged the Department of Labor’s 2024 fiduciary rule.
Investor education and protection: Financial education must be made available to Americans of all ages to equip them with the knowledge to help them achieve their financial goals. We are committed to promoting investor education for all ages across the country, including advocating for programs at the primary and high school levels that provide young Americans with solid, basic financial skills as they enter the workforce. The elderly and those with diminished capacity are the most vulnerable within our communities, and financial advisors are often the first line of defense against financial exploitation.
Financial advisors are often the first line of defense against financial exploitation.
We support “report and hold” rules to empower financial services firms and financial advisors to flag and place a hold on transactions and disbursements when there is reasonable suspicion of financial exploitation of vulnerable investors.
Our team is diligently working to make progress on these issues and meeting with lawmakers and regulators to ensure our industry’s voice is heard.
Dale Brown is the President and CEO of the Financial Services Institute.
