Legislation would remove hurdles for independent financial advisors and lower barriers to entry by allowing commission payments directly to ensemble practices
WASHINGTON, D.C. – The Financial Services Institute (FSI) and the Association of African American Financial Advisors (Quad-A) commended the bipartisan introduction of the Clarity for Compensation Act by Representatives Zach Nunn (R-IA-03) and Gregory Meeks (D-NY-05). The legislation would permanently allow commission payments to be made directly to advisors’ business entities.
The independent financial services industry has evolved from solo practices to ensemble businesses that allow advisors to improve efficiency and provide more holistic, comprehensive financial planning services. However, outdated SEC rules have required securities commissions be directly paid to individuals—not business entities—which has created operational inefficiencies by complicating payment of business expenses and hindering advisory practices’ ability to attract and compensate the next generation of advisors entering the industry. In November 2025, the SEC issued a no-action letter granting limited relief for payments to ensemble practices, and this legislation would provide a more permanent solution.
“As the industry evolves, the rules must also modernize to meet the needs of advisors, firms and, most importantly, American investors,” said FSI President & CEO Dale Brown. “Independent financial advisors need clarity and certainty that receiving commissions through their business entities will not expose them to claims by a future SEC that they are required to register as broker-dealers. This bill ensures that these businesses can operate more efficiently, recruit the next generation of advisors, and offer their clients a wider range of products and services to better meet their financial needs.”
“This legislation will allow for much-needed modernization of regulatory rules that will greatly simplify and streamline how advisory practices receive payment,” stated Dr. Alex David, Quad-A Board Chair and President & CEO at Equity Services, Inc. “Independent financial advisors are small-business owners, and the current rules create unnecessary administrative burdens that hinder reinvestment in their businesses and growth. Removing these barriers will help practices attract and hire new, diverse talent, particularly young professionals who rely on salaries as they establish themselves within the profession.”
The Clarity for Compensation Act has been assigned to the House Financial Services Committee. A hearing date has not been set.
About the Financial Services Institute (FSI)
The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for over 60 independent financial services firm members and their 130,000+ affiliated financial advisors – which comprise over 45% of all producing registered representatives. We effect change through involvement in FINRA governance as well as constructive engagement in the regulatory and legislative processes, working to create a healthier regulatory environment for our members so they can provide affordable, objective advice to hard-working Main Street Americans. For more information, please visit financialservices.org.
About the Association of African American Financial Advisors (Quad-A)
The Association of African American Financial Advisors (Quad-A) is a nonprofit membership organization committed to advancing the success of African American financial professionals through advocacy, professional development, and community engagement. Quad-A champions policies that promote equitable representation and inclusive practices within the financial services industry, including active engagement with Congress and regulatory bodies to shape legislation that supports Black and African American advisors and the communities they serve.
In addition to supporting financial professionals, Quad-A partners with colleges, universities, and student organizations to expand access to financial education and build a strong, diverse pipeline of future Black financial advisors. Through strategic alliances, mentoring, and leadership development, Quad-A empowers its members and drives lasting economic impact across generations. Learn more at http://www.aaafainc.org.
