July 23, 2012
--- FINRA’s proposed fee hikes for new applications and branch
office registrations would force many independent broker/dealers (IDBs) out of
business, the Financial Services Institute (FSI) said. ---
The group that would be hurt the most is “Main Street
America” that IDBs typically serve, FSI said in a July 19 comment letter to the
Securities and Exchange Commission (SEC), released Monday. FINRA records show
that in 2008 there were more than 5,000 broker/dealer firms, and by 2012, that
number had fallen to 4,400, according to FSI. With the average median profit
margin for IBDs a mere 1.7%, the increased costs to enter or possibly even
remain in the financial planning industry would be prohibitive, FSI said.
One of the increases FSI is particularly alarmed over is the
fee for new member applications, rising from its current range of $3,000-$5,000
to $7,500-$55,000, with an additional $5,000 charge for new member firms. Firms
that have become FINRA members would be hit with a new “continuing-membership
application fee … from $5,000 to $100,000, depending on the size of the firm,”
FSI said.
In asking for these fees on top of “recent significant
increases in FINRA’s Personnel Assessment (PA) and Gross Income Assessment
(GIA) [in 2009], FINRA has failed to provide an appropriate justification for
these significant fee increases, especially in light of the current economic
climate,” David T. Bellaire, Esq., FSI general counsel and director of
government affairs, wrote in the comment letter.