In the wake of the November elections, we are seeing political and business mind-sets converge in at least one important respect in Washington, D.C., and across the country, as incoming freshmen members of Congress work to assess the demands of representing their constituents, at the same time that independent financial advisors and their clients take stock of the new economic realities that will impact them over the next several years.
With these factors in play—and keeping in mind the critical importance of educating new legislators about a particular industry before they are biased by other parties—it is absolutely critical for independent financial advisors to begin building relationships with incoming lawmakers as both groups work to represent the needs of Main Street American voters and investors.
This is more important than ever in light of several policy issues that will have a deep impact on our industry in the years ahead:
• The Department of Labor’s (DOL) upcoming proposal to redefine “fiduciary,” which could ban commissions for advisors on IRA accounts and potentially price millions of investors out of independent professional financial advice (a rule is most likely coming in July).
• The ongoing and urgent need to protect financial advisors’ independent contractor status and stop them from being forced to become employees of their broker-dealer, which enables advisors to provide tailored service according to their clients’ unique needs.
• Perhaps most importantly, the need to reform and streamline Finra, the SEC and other regulatory organizations, to help them function effectively in today’s financial environment.
The Financial Services Institute’s (FSI) recent, first-ever Congressional Fly-In demonstrates how independent advisors can make their voices heard with the freshmen legislators whose decisions will shape the future of our industry.
As part of this effort, we met with freshman Rep. Susan Brooks (IN-5) to discuss critical regulatory and legislative issues that will affect investors across the country in the coming years. We also met with other members of the Indiana delegation, including Rep. Luke Messer (IN-6), Rep. Todd Rokita (IN-4) and Rep. Marlin Stutzman (IN-3), during our visit.
FSI also recently facilitated meetings between financial advisor members from Missouri, Maryland and North Carolina and their respective freshmen Congressional representatives.
These meetings served a number of crucial functions, including:
• Enabling advisors to convey their own thoughts on the legislative and regulatory environment in real-world terms.
• Giving newly elected lawmakers a chance to hear from crucial voices in their own districts. As FSI Vice President for Legislative Affairs Robert Lewis, who leads FSI’s initiatives to build rapport between its members and their legislators, said, “When we bring advisors to meet with freshmen representatives in Congress, we’re not only bringing in a constituent, we’re bringing in a local business leader.”
• Establishing connections between advisors and their legislators and staff members. As advisors know from their work with clients, nothing is more powerful in creating a relationship or conveying a crucial message than a face-to-face discussion.
Continuing these relationships over the long term is crucial not only to advisors, but to legislators as well. “To say that freshmen members of Congress are ‘overwhelmed’ is probably putting it mildly,” says Lewis. “It’s a big help when we and our members tell them that we can be a resource on issues they are currently considering or that are coming up—and legislators remember constituents who have always been there for them.”
As independent financial advisors consider the outlook for their clients and their businesses over the next several years, we urge them to take every opportunity to reach out to their elected officials in Congress, both to position themselves as resources for these leaders and to help legislators understand the crucial issues facing our industry. Such outreach might include meeting with legislators in their local offices, taking legislators or their staff members to lunch, and participating in industry advocacy organizations such as FSI.
Reaching out to incoming freshmen lawmakers during their early days in office, while they are still assessing legislative priorities and determining who can be helpful to them in dealing with the enormous array of issues coming to their desks, is particularly vital.
In making the voice of our industry heard, it’s critical to have a receptive audience—and lawmakers are rarely more receptive than during their initial weeks in office.
Mark Just is founder and president of The Just Company. Richard Hawk is managing director of Bay Port Wealth Management. Both are members of FSI and are based in Indiana. Mark Just is not affiliated with Bay Port Wealth Management or LPL Financial.