In a rare act of bipartisanship designed to increase the availability of advice for investors, the House of Representatives has passed two bills which would reduce regulations on smaller investment advisor firms.

The bills were passed as part of a larger legislative package dubbed the Jobs Act 3.0, which has been sent to the Senate for consideration.

“A strong and vibrant economy depends on modernized laws and regulations that reflect the needs of Main Street Americans,” said Rep. Gwen Moore (D-Wisc.), sponsor of the Investment Adviser Regulatory Flexibility Improvement Act.

“My bipartisan bill does just that by requiring the Security and Exchange Commission to expand its outdated definition of a ‘small business’ to ensure that small, minority-owned and women-run investment advisor firms are subject to regulations commensurate with their scale. This legislation will provide local advisor firms the relief they need to reinvigorate community-based economic growth,” Moore said. The SEC is given a year from enactment of the bill to conduct a regulatory impact study in order to reduce the regulatory burden on small firms.

The bill’s passage underscores lawmakers’ newfound appreciation for the vital role that investment advisors play in the financial services marketplace, as well as the impact regulatory overload is having on smaller investment advisors, Karen Barr, president and CEO of the Investment Adviser Association (IAA), told Financial Advisor Magazine.

IAA was the primary proponent of this legislation, with both IAA lobbyists and members discussing the need for regulatory relief for small advisors with their members of congress during the association’s advocacy day on Capital Hill earlier this year.

“The near unanimous passage of this act signifies that members of congress are concerned about small business and the cumulative impact of one-size-fits-all regulation on them,” Barr said. “This evidences a bipartisan focus on encouraging small business and trying to streamline the regulatory burdens.

While many people have heard of larger advisory firms, “in reality more than 7,000 out of 12,000 registered investment advisors have 10 or fewer employees. So our industry is made up out of small business and it’s critically important that these businesses survive to create advice and jobs,” Barr said.

She said IAA has heard from advisors for years that the cumulative impact of increasing regulation is causing budget, compliance and operational burdens. “Many new regulations require fixed investments in technology, infrastructure and personnel and are not written with small businesses in mind. They are written for large advisors and small advisors are just collateral damage.”

The result is fewer smaller advisory firms, Barr said. “We’re definitely seeing increased consolidation in our industry as firms realize they need to scale up to manage regulatory and compliance obligations.”

As part of the larger package, the House also passed the Modernizing Disclosures for Investors Act. Sponsored by Rep. Ann Wagner, R-Mo., the bill would require the SEC to study the costs and benefits of investment advisors’ current Form 10-Q reporting requirement. The bill will require the SEC to issue a report of its analysis and recommendations for decreasing costs, increasing transparency and increasing efficiency of quarterly reporting.

Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, and Rep. Maxine Waters (D-CA), ranking member on the committee, worked jointly to pass the Jobs Act 3.0. Hensarling said in statement the bill would “help America’s small businesses and entrepreneurs and protect investors.”

Waters read from a letter from the IAA last week during committee markup of the bill: “[T]he SEC would have to better assess the impact of its regulations on firms that are truly small businesses and give greater consideration to appropriate alternatives that would minimize unnecessary burdens on these firms,” the IIA said.

The strong pro-business headwind in Congress, as well as a recognition that investors need investment advice to successfully create their own financial security in retirement, may help the bill’s odds in the Senate.

“As this bill moves to the Senate, it is essential that Congress continues to work to implement regulations and reforms that put communities first by supporting small businesses and protecting their access to capital,” Moore said.