The Financial Services Institute, the advisory organization for independent broker/dealers and independent advisors, is increasing its annual fees for its broker/dealer members. Dues will increase starting Nov. 1, on a sliding scale based on the firm’s revenues, and rise again in 2014. For example, a firm making under $5 million in revenue will pay $1,500 a year in 2012 and 2013, up from $1,000 this year. In 2014, these firms will see an increase to $2,000. Are the increases worth the advocacy and regulatory change that FSI influences?
It’s not like FSI executives are sitting at home twiddling their thumbs. In fact, the organization has been quite active lately, redesigning its website, lobbying for a single SRO for investment advisors, and urging California to amend an independent contractor bill that would’ve imposed extra regulatory burdens. Other achievements (FSI says) include:
- An indefinite delay in the SEC’s proposal to change 12b-1 fees;
- The withdrawal and announced re-proposal of the Department of Labor’s (DOL) rule redefining the term fiduciary;
- Forestalled the SEC’s threatened reform of 12b-1 fees since 2007;
- Advocated for the repeal of expanded 1099 reporting requirements (H.R. 4);
- Delayed implementation of the new FINRA Suitability Rule 2111 for nine months.
But IBD margins are tighter than ever, and regulatory oversight is only going to get worse, meaning firms will have to hire more compliance people or shell out money to outsource. Many already can’t handle the net capital requirements and the crackdown on alternative investments that they’ve had to close their doors. Is it worth the $1500, $4375, $9000, $12900, and so on (depending on your total revenue) to have someone on your side to fight against burdensome regulatory changes? These guys seem to think so:
Wayne Bloom, chief executive of Commonwealth Financial Network: "The increase isn't insignificant, but to put forth the number of advocacy issues FSI has on its plate, they need to increase their budget. It would be penny wise and pound foolish not to support the efforts FSI puts forth.”
Mari Buechner, president and chief executive of Coordinated Capital Securities Inc.: “You have to look at it from the perspective that FSI can do more than I could do as a small firm. FSI has had some great victories with very limited resources, and even though we're in difficult times, the time is now to continue to invest and continue the momentum.”
That said, some of the smaller firms won’t be so happy to see the additional cost. What do you think about the new fee structure?