Whether or not planners like the idea of being regulated by FINRA, some could end up paying fees of $51,700 or more a year for the privilege, according to a study commissioned by the Financial Planning Coalition, composed of FPA, CFP Board and NAPFA.

“I think this would absolutely impact all of our small business owners,” said Karen Nystrom, manager of public policy and advocacy with NAPFA. “We agree that more oversight is needed but where we differ is the most cost effective way to get there.”

FINRA calls the Boston Consulting Group study estimates “wildly inflated.”

“They [BCG) didn’t speak with us or with the SEC when they were created,” says FINRA spokeswoman Nancy Condon.

A FINRA statement adds that, "It is clear the groups that commissioned the report wanted a public relations and lobbying vehicle rather than a legitimate study."

Nystrom counters that the estimates were based on publicly available data.

Fears of these high costs were stoked after House Financial Services Committee Chairman Spencer Bachus (R-LA) introduced legislation Wednesday in the house that could clear the way for FINRA to become the self-regulatory organization for retail investment advisors.

The bill is co-sponsored by Rep. Carolyn McCarthy (D-NY). A bipartisan bill increases the likelihood that the bill might make it to the Senate Democratic-controlled Senate this year, but its ultimate fate, especially in an election year, is far from certain. The Bachus-McCarthy bill would authorize one or more self-regulatory organizations (SROs) for investment advisers funded by membership fees.

The Financial Planning Coalition and others in the industry want to see the SEC receive stepped-up funding to handle this oversight – a difficult prospect in the current political environment. To this point, the consulting firm further found that 81% of advisors preferred to be regulated by the SEC versus 19% for FINRA.

Either way, according to the BCG study, the financial hit to advisors could be steep, though it only applies to advisors with $100 million in AUM or more. Smaller firms would be regulated by their states.

If the SEC instituted fees to fund only the incremental cost to hire additional advisor examiners, the annual cost would be about $11,300, according to the study. An enhanced SEC program could incur costs of $27,300 a year for advisors. That compares with the $51,700 for FINRA to assume this role or $57,400 if an entirely new SRO were created for that purpose, according to the BCG.

With FINRA as the regulator, fees for the largest firms with $50 billion or more in AUM would climb to as much as $350,000 a year, the study reports.

With fees even in the $50,000 range, “you are hitting the bottom line of a firm,” says Sandra Field, founder of Asset Planning Inc. in Cypress, Calif., a firm with $120 million in AUM. “You’re talking about having to cut out a part-time employee. This may have an impact on layoffs in the financial services industry.”

Field said she wouldn’t be happy paying even $5,000 a year, though she believes that enhanced oversight is critical. “When these Ponzi schemes turn up and advisors living lavishly off client money, this is a blight on all of us.”

Jeff Fishman, a planner in Los Angeles with $400 million in AUM, said it doesn’t make sense to him to have FINRA assume this role. In his dually registered firm, Fishman deals with FINRA on the B-D side and the SEC on the RIA side. Like other planners, he has already incurred substantial costs to comply with enhanced SEC regulations like adopting “plain language" in his firm’s ADV.

“To go ahead now and put entrepreneurial firms, who have already complied with new SEC regulations, in the position where they have to switch over to a new regulatory body, personally I think it would be a whole new burden,” Fishman says.

He adds that for FINRA to shift its responsibility from a purely B-D mentality to an RIA one would also take time and expense. “I’d have to imagine it would take FINRA time to get up to speed to properly audit,” he says.

Whichever body ultimately assumes responsibility, all parties to this debate agree that more regulation is needed. Investment advisers and broker-dealers often provide indistinguishable services to retail customers, yet only 8% of investment advisers were examined by the SEC in 2011 compared to 58% of broker-dealers.

This discrepancy has lead even some long-time opponents of a FINRA SRO to conclude that it might be preferable to having widespread lack of oversight continue.

“Having spent the better part of two decades arguing for various approaches to increase SEC resources for investment adviser oversight with nothing to show for our efforts, we have been forced to reassess our opposition to the SRO approach,” Barbara Roper, director of investor protection for the Consumer Federation of America testified before the Senate last year. “Specifically, we have concluded that a properly structured SRO proposal would be a significant improvement over the status quo.”

However, Roper has said she would prefer to support a proposal in which advisors would pay fees to fund the SEC to do the job.

“We as a general principle think you ought to fund government to do the job you want government to do,” she said.

That said, convincing politicians to fund the SEC to do the job just isn’t going to happen, says Chris Paulitz, spokesman for the Financial Services Institute. The institute has officially endorsed FINRA as the SRO.

“While our members never love any regulator, we have a very, very good working relationship with FINRA,” Paulitz says.

He says the institute has been very impressed with Roper’s willingness to contemplate an SRO, including FINRA, playing this role. “That shows great character,” he says.

“The SEC has said that 30% of RIAs have never been regulated,” he adds. “Is anything going to be perfect? Of course not. Let’s just get something done.”

Calls to Representatives Bachus and McCarthy were not returned by press time. Nor was a call to powerful FINRA lobbyist Michael Oxley, of Sarbannes-Oxley fame, who supports the new bill.

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