Regulatory barriers that penalize independent financial advisors for operating as small businesses would be removed under a bipartisan bill sponsored on Jan. 21 by U.S. Rep. Zach Nunn (R-IA).
“Small-town financial advisors shouldn’t be treated differently just because the rules haven’t kept up,” Rep. Nunn said. “These are folks helping families save for college, buy their first home, or plan for retirement. Our bipartisan bill gives them the same flexibility other professionals already have and helps keep trusted, independent advisors serving local communities.”
The congressman introduced the Clarity for Compensation Act, H.R. 7187, with lead original cosponsor U.S. Rep. Gregory Meeks (D-NY) to amend the Securities Exchange Act of 1934 to provide an exemption from the definition of a broker for certain registered representative-owned personal services entities.
Under current law, registered financial advisors are often prohibited from using their own business entities to receive compensation, an arbitrary restriction that other licensed professionals — lawyers, accountants, and insurance agents — aren’t beholden to, according to Nunn, who said the result is more red tape, higher taxes, and fewer choices for families who rely on local advisors.
“This bill makes compensation rules in the financial services industry clearer and easier to understand,” said Rep. Meeks. “It improves oversight, supports the next generation of professionals, and helps more people access reliable financial advice.”
The Financial Services Institute and Finseca support the bill, which has been referred for consideration to the U.S. House Financial Services Committee.