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Financial Services Institute States Its 2025 Industry Priorities

By Mari Nicholson

Financial Services Institute States Its 2025 Industry Priorities

Financial Services Institute – an advocacy organization for independent financial services firms and independent financial advisers – identified preserving financial advisers’ choice to be or not be considered independent contractors, as well as minimizing “regulation by enforcement” among its top priorities for the year during its annual OneVoice conference.

Each year, FSI develops advocacy priorities related to issues directly impacting the independent financial services industry and the Main Street Americans they serve.

Issues Impacting Independent Firms and Independent Advisers

Independent Contractor Classification: Independent financial advisers choose to operate as independent contractors, many voluntarily switching from an employee-based adviser position to the independent model to better serve their Main Street American clients. Independent advisers are small business owners who, inspired by the entrepreneurial spirit, build their businesses within their communities, hire staff, dictate their own business practices, pay operating expenses, and rely on their business’ success. FSI said it is dedicated to preserving advisers’ choice to be independent contractors and support solutions that offer its members clarity so that they can operate confidently and not waste significant resources defending their worker classification decisions.

Regulatory Modernization: The need for regulatory modernization is paramount in our ever-evolving world with rapid technological advancement and current investor expectations. Existing rules and guidance must be updated to reflect contemporary business models and practices, and regulators need to address the incorporation of new technologies such as digital communications, automation, and AI. FSI identified three key areas for regulatory modernization:

  • Antiquated rules and practices;
  • Technological enhancements to client services; and
  • Access to evolving products and services.

According to FSI, modernized regulations will allow firms and financial advisers to operate more effectively by providing the level of service and customer experience many expect in today’s environment.

Issues Impacting the Financial Services Industry

Regulation by Enforcement: Financial services firms, financial advisers and investors rely on consistent, predictable rules governing the regulatory road. FSI said that enforcement activity must not be used to establish new regulatory requirements, i.e., “regulation by enforcement.” This includes new or evolving interpretations of existing obligations, which should be appropriately done through notice-and-comment rulemaking. The rulemaking process provides stakeholders with an opportunity to express their views about regulatory proposals, according to FSI, and it gives firms and advisers the transparency and certainty needed to operate their businesses and protect investors.

Issues Impacting Main Street Clients

Tax Treatment of Investments: With rising costs and the looming retirement savings crisis, FSI underscored its support for policies that promote saving and make investing and financial advice more attainable for Main Street Americans. It urged lawmakers to restore the tax deductibility of advisory fees – and expand the tax incentives for financial advice – to aid hard-working Americans in accessing the professional financial advice and guidance needed to help them achieve their financial goals.

Standard of Care: FSI expressed its support for a standard of care that acknowledges and accounts for the unique characteristics of the independent financial services model and its ability to provide Main Street Americans with access to financial advice. “Any new standard should account for the existing extensive regulatory regime within which the industry operates, including the SEC’s Regulation Best Interest requirements. Proposals should provide clear, consistent requirements that align with current regulatory rules in order to prevent a patchwork of varying and potentially conflicting standards,” said the advocacy organization, noting those insights as among the reasons it has challenged the Department of Labor’s 2024 fiduciary rule.

Investor Education and Protection: Financial education must be made available to Americans of all ages to equip them with the knowledge to help them achieve their financial goals. FSI reiterated its commitment to promoting investor education for all ages across the country, including advocating for programs at the primary and high school levels that provide young Americans with solid, basic financial skills as they enter the workforce.

FSI also discussed older adults and how those with diminished capacity are the most vulnerable within our communities, and how financial advisers are often the first line of defense against financial exploitation. We support “report and hold” rules to empower financial services firms and financial advisers to flag and place a hold on transactions and disbursements when there is reasonable suspicion of financial exploitation of vulnerable investors.

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