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Raising Fees and Reducing Services-The Investment Advisor Act of 2012 – HR 4624

The government is about to protect you from yourself and in so doing will add another layer of bureaucracy to the plethora of compliance regulation we already must comply with.  The bottom line is you will pay higher fees for less efficient service.

Powerful House Financial Services Chairman, Spencer Bachus is holding a hearing next week on a bill that will hurt small business owners like KFG who provide sound financial planning to consumers and who put their clients’ interests first. We should be alarmed and we should be furious that this bill would allow the foxes to rule the henhouse.

 HR 4264 would strip advisor examination and oversight from the SEC (Securities and Exchange Commission), a government entity that has worked with registered fiduciary advisors for 70 years, and place them with a non-government organization called FINRA (Financial Industry Regulatory Authority), who oversees the Wall Street stockbrokers who created products so confusing and with such outrageous commissions that consumers had little idea what they were being sold.

We take the Fiduciary duty to consider your interests first very seriously. The Fiduciary Standard is a funny term, but that’s what it means: you get planning advice from KFG that is in your best interest. We are your advocate, not a biased salesperson in advisor’s clothing.  Not so with Broker-Dealers. They can sell you a product that pays them a high commission with murky fees, and skip the product that doesn’t, all while appearing they have your best interests at heart. That’s called a Suitability Standard. They are both legal terms. Hard to believe it – we can’t make this stuff up.

Where is the logic in allowing a big business organization with lower standards like FINRA to oversee the independent small business owners with higher standards like your advisor? Where is the logic in allowing for FINRA to obtain a stranglehold over advisors by charging huge annual registration fees and create a hornet’s nest of rules that would make sound advice by independent advisors nearly impossible to economically provide? It only makes sense if you want to limit transparency and accountability but expand conflicts of interest.

Here are a few more details:

  • FINRA’s exorbitant operating expenses and bloated salaries make them more Wall Street than Main Street.
  • FINRA’s mandatory membership fees will put some advisors who offer advice to middle-class savers out of business
  • The burden of making small businesses paymandatory fees to fund FINRA salaries is unconscionable.
  • FINRA is not subject to Sunshine Laws and doesn’t have to hold open meetings.
  • FINRA is not subject to the Freedom of Information Act, and is notoriously secret about their books and records.
  • FINRA is an organization of Wall Street executives who oversee Wall Street brokers.
  • FINRA has no experience working with advisors held to the high fiduciary standard.
  • FINRA can act like a government authority without government accountability.

If you want to do something about it, you can call your Congress Member’s office today (SD clients can call Rep Kristi Noem’s office) and voice your opposition the HR 4624 by clicking here.  All you have to do in put in your zip code and you will be directed to your contact info for your Congressional office.

It could be as simple as saying the following, or drawing from the bullet points above:

“As a constituent I would like to voice strong opposition to HR 4624. I value the unbiased relationship of advocacy I have with my fiduciary financial planner.  Small independent businesses like my fee-only financial planner will suffer or fail if their oversight is outsourced to a non-governmental, sales oriented organization like FINRA. Please stand for transparency, unbiased advice, and accountability. I am also disturbed that FINRA is not subject to Sunshine Laws or the Freedom of Information Act. Thank you for your time.”

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