Large retirement plan providers tried to offer California’s teachers and other education workers simpler plan options, but the Financial Services Institute said it should not come at the expense of access to quality personalized investment advice.

The FSI, and the independent broker dealers it represents, won out. California Assembly members defeated, in the insurance committee, a proposed bill that would have required that school districts, community colleges, county education offices and charter schools, choose no more than four providers to operate their respective 403(b) plans.  As such, participants would be restricted to choosing only the types of mutual funds offered by those four plan providers, according to the text of the proposed legislation.

“We see in that a loss of competition,” says Dave Bellaire, general counsel for the FSI. “That would have led to potentially higher costs, and loss of the personalized investment advice that a local financial advisor could provide.”

It is an important victory for financial advisors everywhere, because California is a bellwether state on this—and virtually any—industry development. FSI officials acknowledged that proponents of the bill might have intended to give plan participants a simpler menu of investment choices, rather than bombard them. And although the proposal did not specify which characteristics those four plan providers should have, FSI took issue with the fact that large national plan providers supported the proposal.

“We think it is an organized effort to create a near monopoly in these highly populated areas,” Bellaire says.

Similar bills have already passed the lower state legislative houses in Illinois and Ohio, Bellaire says. Now the FSI will focus on turning stopping those proposals from becoming law.

“The access to independent advice—from several sources—should be readily open to individuals of all levels to foster affordability and diversity of advice,” Dale Brown, president and CEO of the Financial Services Institute said in a statement. Brown had testified on behalf of the FSI to abandon the proposal. “Giving individuals freedom of choice allows them to make smarter decisions to obtain advice for their own financial future.”