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  • by Skip Schweiss
  • President, TD Ameritrade Trust Company
    Managing Director of Advisor Advocacy & Industry Affairs

Advocating for You: RIAs Convene on Capitol Hill

I just returned from the Investment Adviser Association’s 10th annual Lobbying Day in Washington, D.C., where the IAA and registered independent advisers (RIAs) fan out to meet with lawmakers and their staff to discuss issues of top concern to RIAs.
TD Ameritrade Institutional was invited to help sponsor this year’s event, which we happily did.

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We have participated in the past four events and have found them to be a well-organized affair. IAA schedules meetings with our respective representatives’ offices (Colorado, in my case), as well as with members of key Congressional committees impacting financial services legislation. It is a full and tiring day!

IAA expanded the event this year. On June 6, IAA leaders and members of its Board of Governors met with all three current SEC Commissioners – Kara Stein, Michael Piwowar and Chairman Jay Clayton — to discuss key issues, including proposals for updating the Investment Advisers Act of 1940 (’40 Act) to allow RIAs to advertise, use testimonials and allow greater flexibility in social media use.

The IAA contingent also encouraged the SEC to retain its RIA oversight role and pushed for “title protection,” meaning that brokers would not be permitted to call themselves ‘advisors’ without first registering under the ’40 Act.

On the eve of Lobbying Day, IAA hosted a dinner event featuring a presentation by Greg Valliere, who as Chief Global Strategist at Horizon Investments studies policy and politics and their impact on the marketplace. He gave us an insider’s view of Washington that helps us understand the trends, the thinking, and which way the winds are blowing. Greg delivers his presentations in such a smooth and cohesive way, without slides nor notes. I’m impressed!

Lobbying Day proper, June 7, began with a breakfast where IAA leaders briefed advisers on the key issues we’d be discussing with our elected representatives. Most of the meetings are with staff members, usually those whose portfolio includes economic and financial issues. These are short (usually around 30 minutes) and engaging conversations which occasionally rangebeyond financial services.

Here’s What was Discussed

The SEC has now re-entered the fiduciary rule debate by announcing a new window for public comment. With the DOL’s fiduciary rule having taken effect on June 9th, it’s difficult to see how this plays out between the SEC and DOL, though we understand the two agencies are collaborating. While most RIA advocates would like to see standards raised in some areas, the Devil will be in the details here as we watch how the SEC might define a fiduciary or a “best interest” standard.

Let me stress here that we at TD Ameritrade Institutional advocate for keeping the ’40 Act in place to govern RIAs, since it has stood the test of time.

Perhaps more realistic is the possibility of action by the SEC to clarify roles, through a “title protection“ measure. This might mean restricting brokers from using the word “advisor” unless they are registered under the ’40 Act. This would be a big step forward for investor clarity and TD Ameritrade Institutional would strongly support such a measure.

We are also engaging in more conversations to protect the current deduction for retirement plan contributions. Most policy-makers don’t foresee any changes here, though we will remain vigilant.

Outside of RIA regulation, the general sentiment is that there’s little to no consensus that would allow for immigration reform these days. And reforms in the areas of tax policy and health care are possible, but face a difficult road in today’s partisan Washington. For all you’ve read about the ‘repeal and replace’ of Dodd-Frank, it may soon pass the House, but don’t look for anything beyond that.

Why We Need to Work Together

RIAs are a diverse and independent lot. That is a great strength, but it can be a weakness as well.

When policy-makers in Washington, D.C., are debating legislation or regulation that impacts providers of financial services, we always find that the broker-dealers (BDs) and insurance companies are well-organized, well-funded and consistently on-message.

By contrast, the diverse and independent nature of the RIA segment means it often doesn’t speak with a single, cohesive voice in these debates. There’s a reason we have so many organizations representing RIAs, each with its own slightly different message.

It also means the funding from these small businesses falls far short of their large firm competitors when it comes to lobbying and political campaign donations. This makes us a decided underdog in these debates.
That is a major reason TD Ameritrade Institutional decided over a decade ago to do what it could to help even the playing field. While you are busy running your business and putting your clients’ interests first, we can help your voice be heard in DC. And by working with organizations like IAA, we can amplify that voice. It’s been effective.

A Few Words About the IAA

I should also mention my admiration for the IAA.

The Investment Counselor’s Association was formed way back in 1937, to represent the interests of what were then called “Investment Counselors.” In the wake of the stock market crash of 1929 and the ensuing Great Depression, Congress passed a series of laws to tighten up regulations on the financial services industry.

The Securities Act of 1933 regulated securities issuers; the Securities Exchange Act of 1934 regulated secondary market securities brokerage activities; and the Investment Company Act of 1940 regulated investment companies. The Investment Counselors Association helped draft the ’40 Act that regulates RIAs and soon became the IAA.

As always, we welcome your feedback, and ask you to consider joining us for next year’s IAA Lobbying Day.

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Comments (3)

  1. Bob Doyle says:

    Way to go Skip. Thanks for all you do. I will make it there next year and join you.

  2. Eve Kaplan says:

    Thank you for this helpful summary.

  3. Christina O'Bryan says:

    Thanks for representing RIAs and keeping us informed. I appreciate the defense and am glad to hear of some offensive plays. I will pass this along to my State Representative, Brett Guthrie. He is open to hearing of the impact of regulations on those of us in the field and works to understand our concerns. I met with him on these issues on June 1 in Owensboro, KY. Keep up the good work.

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