The Financial Services Institute’s (FSI) core mission is to support a healthy regulatory environment that works by protecting investors and expanding access to professional financial advice for Main Street Americans. That means helping firms and advisors solve the practical problems they face every day and turning those challenges into workable policy outcomes.
One particularly frustrating problem we have been working on is removing regulatory prohibitions on the payment of commissions to business entities owned and operated by financial advisors. There was a time when the majority of financial advisors worked as sole practitioners. Today, they often work in ensemble practices or as part of a larger team of financial advisors who share expenses and expertise.
However, the rules for commission payments have not kept up with the evolution of business models, creating obstacles for these teams as they work to grow their businesses, pay staff and reinvest in resources that support client service.
After years of hard work, we recently secured no-action relief from the SEC that brings some clarity to this issue. This was an important step forward, but no-action relief can be withdrawn, and Congress should finish the job by passing the Clarity for Compensation Act.
Turn SEC Relief Into A Lasting Standard
Simply put, this law would make the rules clear and permanent. If certain safeguards are followed, business entities owned and operated by financial advisors could receive commission payments as a settled matter without questioning whether the guidance would change in the future. This would mean less uncertainty, fewer workarounds and more confidence to invest in teams and shared resources that help clients.
This law would make the rules clear and permanent.
This is important because ensemble practices and other business models help advisors provide comprehensive service and work more efficiently. They also offer a natural way for new talent to join the field. Young advisors can join a team, earn a salary, learn under the guidance of seasoned advisors and gradually take on more responsibility with clients.
SEC Relief Was A Good Start. Now Congress Needs To Finish The Job.
Without a doubt, the SEC staff's no-action relief is a meaningful and substantive step forward. It recognizes the practical reality that advisors own and operate businesses and provides clear guidance for the payment of commissions to business entities owned by financial advisors under defined conditions. But no-action relief can change or be taken away. Another administration can simply discard it.
That is why the Clarity for Compensation Act matters. The bill would make the rules clear and permanent, giving firms a reliable standard for how commissions can flow through businesses owned by advisors. That certainty supports hiring, investment in shared infrastructure and long-term continuity.
The SEC has created the path. Now, lawmakers should make it permanent.
Today’s Teams Need Permanent Commission Rules
Advisor-owned business entities are not a niche or a fad. They are now a common way for independent advisors to structure their practices, provide full-service advice, build careers and serve clients with greater expertise. Notably, they also provide Americans with holistic financial planning services, particularly in rural and underserved communities. Payment rules should match these realities.
Congress has a clear chance to take a practical solution that regulators already support and make it permanent. Passing the Clarity for Compensation Act would reduce uncertainty, strengthen the team-based model for independent advice, create career paths for new entrants into the industry and help keep professional guidance available for Main Street Americans. Now is the time to finish the job.
Dale Brown is the President and CEO of the Financial Services Institute.
