In what some might see as a poke in the eye to Congressional saber-rattlers, the Securities and Exchange Commission’s Study on Enhancing Investment Adviser Examinations, required by Section 914 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, flatly told Congress that it doesn’t have the resources to oversee advisors and that lawmakers’ best option is to empower a self-regulatory organization such as FINRA to do the job.

The SEC currently oversees 11,888 registered investment advisors, according to the report, but it’s shifting oversight of a chunk of them to FINRA. Soon, the SEC will just oversee RIAs with $100 million or more in assets, all 8,538 of them, while those with less will be policed by the self-regulatory organization.

The SEC said that there is already a lot of crossover between its and FINRA’s oversight.

“While only about 5% of investment advisers registered under the Advisers Act are broker-dealers and thus members of FINRA, almost all of the largest retail broker-dealers are also registered as investment advisers,” the report said. “These dual registrants have a substantial portion of retail advisory clients and employ a significant number of investment adviser representatives. Authorization of FINRA to enforce the Advisers Act would free existing Commission resources spent examining dual registrants to be re-directed to other investment advisers.”

Commissioner Elisse Walter went further in a fiery statement criticizing Congress’ lack of funding for the SEC, saying that she wants to “ensure that Congress knows that the current resource problem is severe, that the problem will only be worse in the future, and that a solution is needed now.”

FINRA was, of course, delighted by the SEC’s endorsement.

“We agree with the SEC that an SRO can augment government oversight programs through more frequent examinations,” it said in a statement. “As we have consistently stated, customers of investment advisers would benefit from the additional protection afforded by SRO oversight. Investors deserve the same level of protection regardless of whether they are dealing with a broker or investment adviser.”

The Investment Adviser Association wasn’t so keen. The organization, which represents 500 RIAs, prefers the cache of federal oversight. “We continue to strongly support regulation and oversight by the SEC, a single governmental regulator, accountable to the Congress and the public, that places investor protection as its paramount mission,” David Tittsworth, IAA’s executive director, said in a statement.

The SEC told Congress if it wasn’t funded by government or through fees levied on RIAs an SRO like FINRA would have to do the job. Evidently realists, to get the end they want, IAA members “believe that user fees deserve strong consideration by Congress,” Tittsworth said.

Any way you look at it, there’s no doubt “the SEC punted it,” said Harry Chaffee, director of Renaissance Regulatory Services in Boca Raton, Fla. “The SEC looks at 20% of advisors while FINRA looks at 57% of broker-dealers per year, so it’s in a better position to catch things,” Chaffee points out, adding that “Congress has to be reasonable—without a government agent sitting next to every financial advisor, it’s not going to be a perfect system.”