Rep. Waters Introduces Bill to Boost Exams

Legislation introduced by Congresswoman Maxine Waters would give the Securities and Exchange Commission (SEC) the authority to impose user fees on investment advisers.

A ranking member of the House Financial Services Committee, Maxine Waters (D-Calif.) has introduced the Investment Adviser Examination Improvement Act of 2013 (HR 1627), which would provide the SEC with a dedicated funding source to strengthen adviser oversight.

“Public confidence in our financial markets has deteriorated” since the financial crisis, Waters said in a release, and inadequate funding levels are the reason. (See “Budget Puts the Squeeze on Adviser Exams.”)

Even though the vast majority of investment advisers operate with integrity, Waters said she felt it is clear that the SEC’s current examination levels need to be boosted in order to restore public trust in the financial marketplace.

Waters called the user fee the simplest and most direct method for achieving the desired result, which is “improved quality and quantity of these exams, and another step towards restoration of public confidence in our markets.”

Opinions of the bill vary, but of course, even the definition of “adviser” does not mean the same thing to everyone. According to James Sampson, a principal with Cornerstone Retirement Advisors LLC, confusion still abounds about the difference between wealth advisers and retirement plan advisers. “They still look at me strange when I tell them I don’t have a trade blotter, because I don’t place trades,” Sampson told PLANADVISER.


“I get plenty of scrutiny from the broker/dealer side of things, and I know my RIA, which is affiliated through my broker/dealer, LPL, does as well, as they recently completed a very thorough audit.” Sampson said he has no problem with the SEC performing exams.

The Investment Advisor Association (IAA), the trade association for investment advisers, approved the legislation as providing “a stable source of funding to SEC to be used for the sole purpose of enhancing investment adviser examinations” without taxpayer dollars.

“Increasing adviser examinations is good for both consumers and advisers,” said the Financial Planning Coalition, which comprises the Certified Financial Planner Board of Standards Inc. (CFP Board), the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA). 

“Investment advisers play a huge role in the financial lives of millions of Americans, and we should make sure that they’re acting properly,” said Rep. John K. Delaney (D-Md.), a member of the House Financial Services Committee and an original co-sponsor of the legislation. “In a time of tight budgets … [t]his legislation would allow the SEC to improve oversight and help protect investors.”

Congress recognized the problem of inadequate investor adviser oversight when it enacted the Wall Street Reform and Consumer Protection Act of 2010, which tasked the SEC with studying the best approaches for improving the investment adviser examination system. 

The bill would also preserve the expanded role of state securities regulators provided under the Dodd-Frank Act, which directs the SEC to focus on large advisers—those with more than $100 million in assets under management.