Charles Schwab & Co. has joined the contingent of financial services companies opposed to the Investment Advisor Oversight Act of 2012, better known as the "Bachus Bill."

Bernie Clark, executive vice president of Schwab Advisor Services Bernie Clark, announced he'll partake in an industry protest to the proposed legislation in Washington D.C. on June 7.

In a letter sent out to Schwab's registered investment advisor (RIA) clients on Wednesday, Clark said he will participate in "an important day of advocacy for RIAs, organized by the Investment Advisor Association (IAA)." He said he also plans to meet with members of Congress on his own. Another prominent custodian, TD Ameritrade Institutional, has long opposed the concept behind the bill, which seeks to transfer RIA regulation from the Securities and Exchange Commission to the Financial Industry Regulatory Authority (Finra).

In his letter, Clark urged Schwab's RIA clients to join in the discussion by responding to the letter online. "I'm writing to see if we can add your voice to the strong message we'll be delivering to Congress," Clark wrote. Clark listed three ways RIAs can get involved: e-mail your Congressman; send a tweet on Twitter; or send him an e-mail that he promised to deliver to Washington officials and the media.

A Schwab spokesperson said the company has received over 80 individual e-mails with comments from clients in opposition to the bill. Additionally, Schwab has started a Twitter hashtag (#OpposeHR4624) that it will use to continue the discussion.

The Investment Advisor Oversight Act of 2012  was introduced by House Financial Services Committee Chairman Spencer Bachus (R-AL) last year. If passed, it would create a separate regulatory organization (SRO) to monitor and regulate financial advisors. The Financial Services Committee is slated to hold a hearing on June 6 on redrafting the Bachus Bill.

"As I know you are aware, the Dodd-Frank bill required the SEC to study the issue of whether it has enough resources to adequately examine registered investment advisors," Clark wrote. "The Securities and Exchange Commission (SEC) staff concluded that more resources are necessary, and recommended Congress consider several options including a new advisor self-regulatory organization ("SRO") like Finra, or having the SEC administer a user fee paid by advisors based on their size to help pay for more exam resources at the SEC."

Clark said that since then, studies have shown that an SRO for advisors would be "more cumbersome and expensive."

"The resolution of this issue could have a substantial impact on your business. Most notably, House Financial Services Committee Chairman Spencer Bachus has proposed legislation that-if passed-would subject advisors to oversight by an SRO and regulation very similar to that which broker-dealers face," Clark wrote.

While we agree that changes are necessary to make sure that investment advisors are examined more frequently, we do not believe the way to get there is by regulating RIAs and broker-dealers as if they were the same," Clark added. "We believe advisors are best regulated through principles-based regulation by the SEC, supplemented by more examination resources, as opposed to rules-based regulation and oversight by an SRO."

"The bill would subject thousands of advisory firms to broad rulemaking, inspection and enforcement authority by a private regulator," he continued.

-Jim McConville