ARLINGTON, VA. -- The groups representing investment advisors and financial planners that have been advocating for legislation that would enable the SEC to step up its oversight of the RIA sector have shifted gears, turning their lobbying efforts away from the House as they now work to gin up bipartisan support for the measure in the Senate.

At the Investment Adviser Association's compliance summit here on Thursday, Neil Simon, the group's policy chief, recalled lobbying efforts on behalf of a House bill that would have authorized the SEC to collect user fees from advisors to fund more frequent and thorough examinations of industry members.

That legislation, backed by California Democrat Maxine Waters, ran up against opposition from the other side of the aisle and from some outside government, including FINRA, which advocated for an alternative proposal to turn advisor exams over to a self-regulatory organization (a role that in all likelihood would have fallen to FINRA).


The so-called SRO debate is now on the back burner in the House, with Waters' bill unlikely to move through committee, but the IAA and allies like the CFP Board are hoping to revive the effort with a broader show of support in the upper chamber.

"Although the bill is languishing in the House for lack of Republican support, we are working hard to gain introduction of a bipartisan version of the bill in the Senate," Simon said.

The full court press in favor of the yet-to-be-introduced Senate bill will be a key focus of the IAA's June 12 lobbying day, when members of the association will make their case in meetings with lawmakers and staffers on Capitol Hill.


The push for stronger oversight of investment advisors comes from the SEC's own admission that its resources are inadequate to police the sector. The commission reported that it examined just 8% of advisors under its purview last year, a figure that Simon called "politically indefensible." But there appears to be no momentum to take action on advisor oversight in the House Financial Services Committee under new Chairman Jeb Hensarling (R-Texas).

"Frankly this is simply not an issue that Hensarling is interested in," Simon said.

At the same time, from the IAA's perspective, the committee's inaction is an improvement from the last session of congress, when the panel was headed by Alabama's Spencer Bachus, who Simon believes "carried FINRA's water" by authoring a bill that would have required advisors "to submit to a self-regulatory organization's examination, enforcement and regulatory authority."


The SRO bill is unlikely to be reintroduced in the current congress, according to Simon, though that hardly signals the end of the debate.

"[FINRA] remains committed to getting authority over advisors. It's playing the long game. It's laying the foundation for a future lobbying effort, and it views advisors as both a regulatory and revenue opportunity," Simon said.

A spokeswoman for FINRA did not immediately respond to a request for comment in response to Simon's remarks.


In FINRA, which has made its pitch for assuming oversight of advisors, Simon sees one participant in a broader affront to the advisor sector that seeks to dilute the distinct fiduciary status associated with RIAs.

"There's further bad news, because this effort to impose an SRO on advisors is part of a much larger broker-dealer-driven harmonization agenda that is focused on imposing broker-dealer regulation on advisors, and eliminating advisors' unique fiduciary-centric, buy-side status in the financial marketplace," Simon said. "I truly believe that is what is going on."

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