FSI Shares FINRA’s Investor Protection Goals

Comment Letter Addresses Significant Concerns,
Provides Constructive Recommendations

WASHINGTON, D.C. – The Financial Services Institute (FSI) today submitted a comment letter to FINRA on its Comprehensive Automated Risk Data System (CARDS).

“We are deeply committed to FINRA’s investor protection goals and to continuing our constructive engagement on important regulatory initiatives such as CARDS,” said FSI President & CEO Dale Brown. “We also have significant concerns with the current version of CARDS and address those concerns, along with recommendations for improvement, in great detail in our comment letter.”

In September, FSI announced its Board-level CARDS Task Force. Leading the Task Force is LPL Financial President Robert Moore. Amy Webber, President of Cambridge Investment Research and Steve Chipman, CEO of Foothill Securities, represent the FSI Board of Directors on the Task Force, with members of the FSI Compliance Council and the FSI Operations & Technology Council forming the rest of the group.

Excerpt from the Regulatory Notice 14-37 (CARDS)

  • In the U.S., approximately 201,000 independent financial advisers – or approximately 64
    percent of all practicing financial advisors – operate in the IBD channel.5 These financial advisers
    are self-employed independent contractors, rather than employees of the IBD firms. These
    financial advisers provide comprehensive and affordable financial services that help millions of
    individuals, families, small businesses, associations, organizations, and retirement plans with
    financial education, planning, implementation, and investment monitoring. Clients of independent
    financial advisers are typically “main street America” – it is, in fact, almost part of the “charter”
    of the independent channel. The core market of advisers affiliated with IBDs is comprised of
    clients who have tens and hundreds of thousands as opposed to millions of dollars to invest.
    Independent financial advisers are entrepreneurial business owners who typically have strong ties,
    visibility, and individual name recognition within their communities and client base. Most of their
    new clients come through referrals from existing clients or other centers of influence.6 Independent
    financial advisers get to know their clients personally and provide them investment advice in faceto-face
    meetings. Due to their close ties to the communities in which they operate their small
    businesses, we believe these financial advisers have a strong incentive to make the achievement
    of their clients’ investment objectives their primary goal.
  • CLICK HERE to read the comment letter and executive summary.
...The core market of advisers affiliated with IBDs is comprised of clients who have tens and hundreds of thousands as opposed to millions of dollars to invest

“Regardless of the issue, FSI consistently strives to engage constructively with regulators and elected officials, and that is certainly the case with CARDS,” said Robert Moore. “Our Board and Task Force have worked diligently on this process since January because we support the investor protection goals of FINRA and the CARDS proposal, and we are all equally committed to investor protection.”

“Firms have real-life experience with leveraging technology to enhance their own rigorous supervision and compliance efforts,” said Amy Webber. “Our Task Force has presented FINRA with highly considered recommendations and the information it needs to ensure CARDS can both protect investors and the industry they depend on.”

“FINRA has ambitious goals for CARDS, and to reach those goals there are going to be costs,” said Steve Chipman. “Our Task Force, through our thoughtful and thorough comment letter, describes the challenges that small firms in particular would face – and provides critical recommendations that would balance these costs with the possible benefits.”





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 37,000 independent financial advisors, and 100 independent financial services firms who represent roughly 160,000 affiliated financial advisors. 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.