Advisor Groups Cheer House Panel’s Move to Cut Red Tape

The House Financial Services Committee has unanimously passed the Clarity for Compensation Act, a bipartisan bill that would allow independent financial advisors to collect commissions through their own business entities without requiring those entities to register as brokers with the Securities and Exchange Commission. The bill was introduced in January by Republican Rep. Zach Nunn of Iowa and Democratic Rep. Gregory Meeks of New York.

Under current rules, advisor-owned companies must register as brokers with the SEC to receive commission payments — a requirement that supporters of the bill argue is not imposed on other licensed professionals such as attorneys, accountants, or insurance agents. Proponents say the registration burden creates operational inefficiencies and complicates succession planning for independent practices.

“The Clarity for Compensation Act eliminates operational inefficiencies, supports succession planning and helps attract the next generation of financial advisors — ultimately strengthening Americans’ access to professional, objective financial advice,” Dale Brown, president and CEO, Financial Services Institute.

The Financial Services Institute, Finseca, and the Association of African American Financial Advisors all praised the committee vote and called on the full House to pass the legislation. The bill now awaits a floor vote in the full House of Representatives.