Informed consumers can be a powerful antidote to bad news about advisors who do wrong by their clients.
By Cyril Tuohy
A Congressman from Alabama, who previously supported financial advisor examinations through self-regulatory organizations, has changed his tune. He now supports more frequent advisor exams conducted by the Securities and Exchange Commission (SEC) and paid for by advisors themselves.
There’s a catch, though. The lawmaker in question, Rep. Spencer Bachus, R-Ala., will retire in December.
A popular lawmaker among the financial community, the conservative Republican was the former House Financial Services Committee chairman. He announced he would retire from Congress at the end of his current term.
So where does that leave H.R. 1627, the Investment Adviser Examination Improvement Act of 2013, which has been languishing in the House since it was reintroduced last year by Rep. Maxine Water, D-Calif.?
Despite promises by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, to consider Waters’ request for a hearing of the entire committee to discuss advisor examinations and user fees to pay for them, the odds aren’t looking particularly bright for H.R. 1627
Here’s the situation, in a nutshell. The only Republican to co-sponsor the bill backed by 21 Democratic cosponsors in a Republican-controlled House of Representatives is leaving Congress at the end of the year.
Republican lawmakers don’t appear particularly enamored with a bill to stick user fees — a tax — on financial advisors.
Advisors would have to pay to take more exams more frequently to ensure they are up to date with their fiduciary responsibilities and as a way to lighten the burden on a fiscally stretched SEC.
But unless other Republicans lend their support to H.R. 1627 between now and December, the bill will be left without a Republican sponsor.
With the August recess and midterm elections tying up Congress between September and the middle of November, does the bill have any chance at all of becoming law?
The Investment Adviser Association thinks Bachus’ sponsorship for the user-fee bill is “significant,” as it would spur some bipartisanship.
Even the Financial Planning Coalition, which includes the Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors, said it expects to see more Republican and Democrat cosponsors back H.R. 1627.
Any hope for passage will likely have to wait until the next Congress at the earliest. But if Republicans win the Senate in November, as some political analysts say is likely, the chance of H.R. 1627 making it into law appears even more remote.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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