As the Senate considers the PRO Act, independent advisors everywhere are asking what the possible implications could be. As your premiere partner in going independent and empowering your business, Myriad Advisor Solutions is here to guide you through whatever changes might be coming down the pike.
What is the PRO Act?
The Protecting the Right to Organize (PRO) Act of 2021 was introduced by House & Senate in February of this year. Some of the proposed changes do not affect independent advisors directly, like ending state right-to-work laws. The legislation would expand the definition who can form, join, or assist an employee union, which could change the nature of the relationship between independent advisors and broker dealer.
What might change?
If passed with no caveats or carveouts, the PRO Act would force a stricter employee classification test that would likely classify many independent advisors as employees of their broker-dealer. This would give independent business owners less autonomy when making decisions and controlling costs for their clients.
What is the current outlook?
The Department of Labor (DOL) was developing a rule that would have protected financial advisors by maintaining regulatory supervision does not establish and employee-employer relationship. However, this rule, which would have implemented a simple ‘economic reality test’ to differentiate independent advisors from those who are not economically dependent on an employer.
However, there is hope. When the state of California introduced similar legislation, groups like the Financial Services Institute successfully lobbied for independent financial advisors to be excluded. As well, these and other organizations are challenging the DOL’s sudden reversal because there was no substantive justification for its delay or a meaningful comment period. Finally, given the current make-up of the Senate, the PRO Act might not pass in its current form – if at all.
Regardless of these possible changes, Myriad Advisors Solutions still believes this is a great time to take your practice independent. Call us at 515.850.1212 to learn more about the possible changes and how independence can truly empower your business!