On May 13, Mari Buechner met in Washington DC with FSI President Dale Brown, Eric Schwartz, 2009 chairman of the board, and 10 members of FSI's Financial Advisor Council. We had a productive meeting with Tom Selman, executive vice president for regulatory policy with FINRA, and then divided into three teams for an afternoon of 13 meetings with key representatives, senators, and their staffs. Our advocacy mission was to lay the groundwork to oppose any federal legislation that would change the IRS rules on worker classification. Meeting with Senator Russ Feingold and Representative Tammy Baldwin's offices we shared the following talking points:
A. Independent Contractor Legislation Momentum
• Interest in reclassifying independent contractors is growing.
• Rep. Rob Andrews, (D-NJ 1st), Rep. Richard Neal (D-MA 2nd), and Rep. Jim McDermott (D-WA 7th) confirmed they plan to reintroduce legislation this year.
• The issue is very important to labor unions, which have made it a top priority in their legislative agenda.
• Independent broker-dealers and financial advisors are not involved in the industries where concerns over abuse of independent contractor status have been voiced.
• Legislation will gain momentum as legislators seek new tax revenues – tax revenues from worker reclassification are estimated in the billions.
B. Why Financial Advisors are Appropriately Classified as Independent Contractors
• We operate in a heavily regulated and documented industry in which cash payment for services is strictly prohibited.
• Independent financial advisors operate with flexibility and are entirely responsible their business operations.
• We are small business owners – we own our own office, hire and fire our own staff, and are subject to broker-dealer oversight to ensure that we are complying with securities laws.
C. Impact on Investors, Independent Broker-Dealers, and Financial Advisors
• Additional costs and compliance burdens would cripple ability to remain profitable while also providing much need services to investors.
• Financial Advisors would lose their independence as business owners and would be forced to restructure their businesses, potentially costing jobs as their employees are negatively impacted.
• Middle class investors would lose access to the unbiased professional financial services they need.