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For Members of the Financial Services Institute

March 2013

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The Graying of the Advisor ClassWith members of the Baby Boom generation now retiring in large numbers, their advisors have also begun to take a step back and assess their own prospects for retirement. With this renewed focus on succession planning, one persistent challenge to the industry has taken on an increased air of urgency: There are simply not enough young advisors entering the business to enable more established advisors to hand off their practices with confidence.

According to a recent study by Cerulli Associates, more than 50 percent of financial advisors are over age 54, with less than five percent under age 30. Without a strong population of younger advisors to take the reins someday, today’s established leaders will find it difficult to retire, much less to build sustainable businesses that create lasting equity value once they leave their firms.

Tom Endersbe, CEO of Endersbe, Herron and Associates in Duluth, MN, addressed this topic at FSI’s OneVoice 2013 conference in San Diego. According to Endersbe, this imbalance in advisor demographics can be traced to the evolution of the independent business model, which has become far more challenging for new entrants.

“In the industry today, advisors are not compensated as much at the time they acquire a client or pick up assets; the compensation really comes over time. That presents a real barrier to entry for new advisors,” said Endersbe.

At the same time, firms have had difficulty investing in training programs while their margins are being continually eroded by increased competition, regulatory pressure and other factors. “Firms have lots of content and information,” said Endersbe, “but not as much in the way of training and development programs.”

Philip Palaveev, CEO of advisory focused business consulting firm Ensemble Practice LLC, also stresses the importance of training and development, and emphasizes that individual practices should shift their focus to training the next generation of advisors as a strategic imperative.

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“today, it is the primary responsibility of the advisory firm to bring up, train and develop their successors,” Palaveev said. He notes that broker-dealers — who have a vested interest in seeing the next wave of advisors learn the business — should find ways to partner with their affiliated firms to help in this process, but the responsibility for planning for the practice’s long-term future ultimately lies with advisors themselves.

For firms looking to onboard new advisors with little or no prior experience, Endersbe advises, “Talent development can take from three to seven years, and it requires consistent involvement in the business. You need to have a gameplan for that development process to help junior advisors grow and evolve into their roles, including having them sit in on meetings and rotate through various functions in the business.”

“Most advisors bring someone in to relieve pressure — dealing with paperwork or other back-office functions,” he said. “really training someone means being committed to that person’s future development.”

Endersbe acknowledges, however, that many practices simply do not have the time or the resources to hire and train new advisors. With this in mind, he said, larger practices and broker-dealers can differentiate themselves by developing the capability to help their advisors execute repeatable transition processes through acquisitions, as well.

“ Training someone means being committed to that person’s future development.”

“Firms that position themselves as leaders in facilitating transition plans for veteran advisors — both by establishing development plans for junior advisors and through repeatable processes for practice acquisitions as a strategy for growth — will be the ones that are most attractive for advisors going forward,” he said.

Endersbe emphasized that the industry’s time to resolve these problems may be running short. He noted that a substantial percentage of u.S. assets under management are expected to change hands at some point over the next 10 to 15 years. Practices that do not develop a sustainable business model that can function after the founder or other key producers retire — including training and succession planning functions — are at risk of losing many of their assets.

“there’s a surge coming, and the firms that put together a plan to deal with it have a tremendous opportunity,” Endersbe said. “And the firms that don’t, quite frankly, will get swallowed up.”

Palaveev notes that FSI, in its role as the premiere advocacy organization in the country for the independent financial services industry, will play a crucial function in this area as well. By advancing the interests of the industry and promoting the profile of financial advisors nationwide, FSi can protect the independent advisory business model and ensure that top-quality professionals continue to be drawn to the sector. ¢

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Letter to MembersAlthough we’re only a few months into 2013, FSI is already off to a tremendous start this year. Our annual OneVoice conference, held in January in San Diego, saw a significant boost in

attendance even compared with last year’s record-setting numbers, as 750 broker-dealer and sponsor executives turned out to hear from a wide range of industry thought leaders, share best practices with their peers and get re-energized for the year ahead.

As we emphasized at OneVoice, membership growth and member engagement are the lynchpins of our strategy and the strength of our organization. With over 36,000 financial advisor members, FSi is already a force to be reckoned with on Capitol Hill and across the country — but when all of our members become fully engaged with our mission of advocacy, the voice of our industry will become truly unstoppable.

Our vision at FSI includes mobilizing every one of our 36,000 independent financial advisor members to full engagement in our advocacy efforts, effecting change in every corner of the country. We look forward to the day when our members will be calling on their Congressional representatives themselves, cultivating those relationships on their own, becoming a resource to their elected officials and, ultimately, changing the landscape of our regulatory environment for the better one member and one elected official at a time.

When we all come together to realize this vision, our input and influence will not only be felt in every significant legislative and regulatory initiative that affects your business — the depth of our resources and breadth of our members’ engagement will mean that policy makers will seek out our views and support before they move forward with a proposal.

That’s how we will create a healthier, more business-friendly regulatory environment for all of our members and their clients.

With events like OneVoice and our inaugural Financial Advisor Summit in September, and through our efforts to protect our industry from regulatory and legislative threats across the country, your FSI team is fully engaged in putting your dues and sponsorship dollars to work to make a real impact for your businesses and your clients. We look forward to working with each of you to strengthen our membership base and engagement and to continue to build on the momentum we’ve developed together.

As always, please don’t hesitate to contact us to let us know how our team can better serve you and your clients.

Dale E. Brown, President and CEO





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Dedicated resources, stability, commitment and vision to help you grow your business in the future.

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> Our parent company, BNY Mellon, is one of the world’s strongest financial institutions, with $27.9 trillion in assets under custody and administration*

Grounded in a Strongly Rooted Past.Focused on the Future.

© 2013 Pershing LLC. Pershing LLC, member FINRA, NYSE, SIPC, is a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon). Trademark(s) belong to their respective owners. For professional use only. Not for distribution to the public.

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Q&A with FSI Chair and Vice ChairIn just under 10 years, FSI has established itself as a dynamic force in Washington, D.C. and across the country, advancing the interests of the independent financial services industry via its rigorous advocacy efforts on the issues that matter most to our members.

FSIVoice sat down with FSI’s 2013 Board of Directors Chair, Larry roth, President and CEO of Advisor group, and Vice Chair Mike Mungenast, President and CEO of ProEquities, Inc., to discuss FSI’s upcoming plans, industry trends and the benefits FSi provides not just to its members, but to investors, as well.

QHow do you view your role as Chair?

Larry Roth: My job is to work with Dale Brown and the rest of the Board to chart a clear and effective course forward for FSi — though, to be frank, much of the difficult work pursuant to that course was put in place well before I became Chair earlier this year. three years ago, the Board put together a very detailed five-year plan that placed an emphasis on growing our membership, increasing member engagement and adding sponsors — and we have been executing against that plan ever since. In the end, we hope to mobilize tens of thousands of citizen lobbyists that are capable of effecting positive change for our members and their clients in communities across the country.

QWhat is the most important thing FSI can do to drive membership growth?

Mike Mungenast: Clearly, the partnership between FSI and member firms to fully subsidize first year memberships for their advisors is helping to drive growth. What’s more, the renewal rates associated with that program have been excellent, which shows that advisors are very motivated and want to be engaged with FSI’s current advocacy objectives including decisions surrounding:• Department of labor re-Proposal of the Definition of

“Fiduciary”• Independent Contractor Status• regulatory reform

The key will be to continue to provide them opportunities to remain engaged in the future, and through our Yes We Will! campaign, i’m confident we will do that.

QWhat are your thoughts on the current state of the industry?

Larry Roth: Independent advisors have never been more experienced, better prepared and more thorough with their clients than they are right now. They are great at what they do. Still, our industry does have its fair share of challenges. For one, very few young people are becoming advisors at the moment, even as there

are more clients than ever before. Therefore, while there are literally millions of underserved American investors who need help, fewer and fewer people are qualified to help them.

Mike Mungenast: Much of the problem can be traced back to the burdens placed on our industry by the regulators, who increasingly have made it harder and harder to run a business. As a result, older advisors have been forced to shed many of their clients, while young professionals who would otherwise consider a career as an independent advisor have shied away entirely from entering the space.

Ironically, now is the time America needs us the most. The shadow of 2008 is still upon us even as we are moving away from the bear market. It takes patient conversation and vigilant focus to continue to remind our clients of their goals and support them to attain the proper balance of risk to reward for them specifically. it is the gift of an independent financial advisor to provide that supportive human touch to connect, clarify, and construct.

QWhat role does FSI play in ensuring that all Americans can receive

professional financial advice to help them achieve their goals?

Larry Roth: Well, for some reason, there’s a belief in Congress that our industry is under-regulated. But what lawmakers don’t understand is that independent advisors are private business people who are equipped like no one else in financial services to serve middle market investors.

That’s why it’s so important that FSI continues to grow its membership base. There’s extraordinary value in thousands of individuals coming together in one voice, advocating in Washington, D.C. and in state houses across the country, not only for the independent broker-dealer community but for the broad investing public they serve.

Mike Mungenast: As an industry, we need to put ourselves in the shoes of investors when we attempt to find solutions to the various challenges that we face. From there, everything will take care of itself. By doubling down on our engagement, FSI can positively impact and educate lawmakers and regulators, help middle market investors, and preserve our unique business model. FSI seeks solutions that are not only beneficial to its members, but are focused on meeting the needs of investors across the country, as well. ¢


Dedicated resources, stability, commitment and vision to help you grow your business in the future.

> Serving many of the world’s most respected financial organizations since 1939, staying focused on safeguarding investor assets

> Executing on more than 60 exchanges, and facilitating the trading and conversion of more than 50 currencies

> Dedicated leadership—the average tenure of our senior management is 17 years

> Our parent company, BNY Mellon, is one of the world’s strongest financial institutions, with $27.9 trillion in assets under custody and administration*

Grounded in a Strongly Rooted Past.Focused on the Future.

© 2013 Pershing LLC. Pershing LLC, member FINRA, NYSE, SIPC, is a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon). Trademark(s) belong to their respective owners. For professional use only. Not for distribution to the public.

*As of September 30, 2012.

OPERATIONAL SUPPORT TRADING SERVICES FLEXIBLE TECHNOLOGY INVESTMENT SOLUTIONS PRACTICE MANAGEMENT SERVICE EXCELLENCE

See how we can help you grow Your Business Without Limits TM.

pershing.com

*Based on assigned functionality ratings in multiple areas, according to an Aite Group report, September 2012.SunGard is an independent organization and is not affi liated with National Financial Services or Fidelity. SunGard’s experience may not be representative of the experiences of all clients and is not indicative of future success. National Financial Services LLC does not endorse or recommend any of the third-party products or services mentioned herein.Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or its affi liated companies. National Financial Services LLC, Member NYSE, SIPC. © 2012 FMR LLC. All rights reserved. 627108.1.0

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Recap of OneVoice 2013With each passing year, FSI’s annual OneVoice conference for broker-dealer executives has successfully broken new ground. This year’s event, held January 28 – 30 in San Diego, was no exception. More than 750 firm and sponsor executives attended, shattering last year’s record of approximately 600. The 25 percent spike in attendance is testimony not only to the growing influence of FSi but to our members’ growing commitment to working together to effect change in the legislative and regulatory environment.

The results of this engagement have been clear over the past year. in 2012, FSi won victories in ensuring financial advisors aren’t forced to become employees of their broker-dealers; defending 12b-1 fees; protecting your clients’ choice of investment vehicles such as inherited “stretch” IrAs and annuities; and continued opposition to the Department of Labor’s efforts to ban the earning of commissions on IrA advice.

“Bottom line: We are stronger than ever before,” said FSI President and CEO Dale Brown, addressing the opening general session on the first night of Onevoice 2013. “Firms need our voice, which is their voice collectively.”

Brown assured attendees that FSI would not rest on its laurels or become complacent in pursuit of its advocacy mission, telling the gathering that his vision includes mobilizing each one of FSI’s over 35,000 members for the cause.

“growth without engagement will not get us the advocacy results that firms, their advisors and their clients need and deserve,” he said.

In 24 sessions over six different tracks (Compliance, Operations, Technology, Investment Advisory Services, Marketing and the CEO track), thought leaders from across the industry shared their perspectives on the key trends that are shaping the sector. Discussion topics included transforming broker-dealers’ and advisors’ businesses to serve the investor of the future; the evolving role of ErISA in the independent advisory industry; technology trends for 2013 and many more.

“ By any metric, 2012 was a banner year for FSI. But if the past is any guide, the best is yet to come.”

Highlights from the general sessions included:• greg Valliere, Chief Political Strategist for

the Potomac research group, shared his political, economic and regulatory outlook for 2013, including his positive assessment of economic indicators and attendant opportunities for investors.

• Noted author and industry visionary Brett King discussed the latest trends redefining the financial advisory space, focusing on the ongoing digital evolution of the industry and what it means for independent broker-dealers and their affiliated advisors.

• As one example of how advisors can make use of technology to add value in the digital age, King noted that “good advice will continue to come from strong advisors, but great advice will reach the client at exactly the right time, through tools such as social media and mobile devices.”

• In a discussion moderated by Brett King, Steve Chipman, President and COO of Foothill Securities, Adam Antoniades, President and CEO of First Allied Securities, and Eric Schwartz, CEO and Chairman of the Board of Cambridge Investment research, discussed how our industry can adapt to ongoing changes in technology, regulation, and consumer expectations.

in another first for Onevoice, current and future leaders of member firms also took part in a leadership development workshop prior to the beginning of the conference, where attendees were given a more in-depth look at the evolving relationship between advisors and their clients, as well as insights on how firms can best position themselves to maintain strong client relationships in the years to come.

By any metric, 2012 was a banner year for FSI. But if the past is any guide, the best is yet to come.

FSI looks forward to sharing many more successes with you in the coming year. If you were unable to attend this year, please make plans to join us next year at OneVoice 2014, scheduled for January 27-29 in Washington, D.C. ¢





SPONSOR SPOTLIGHTSenior Secured LoansFranklin Square Capital PartnersAdvisors continue to face numerous challenges to generate income for their clients. As you look to diversify your clients’ portfolios and introduce alternative sources of income, there is an often overlooked asset class that offers investors relatively strong downside protection and a hedge against rising interest rates — Senior Secured Loans.

Senior secured loans, also known as bank loans or leveraged loans, are made by financial institutions to non-investment grade corporate borrowers. Private equity investors will often use a senior secured loan to facilitate their acquisition of the equity interest in a company. these loans generally have terms of five to seven years and, importantly, a floating interest rate, meaning that as the base rate (e.g. LIBOr) increases and resets, so does the coupon payment for the loan.

“ Senior secured loans can reduce a portfolio’s overall risk because they tend to perform independently of traditional assets.”

Another valuable feature of these loans is that they usually comprise the most senior portion of a borrower’s capital structure. The interest and principal of the senior secured loan must be paid prior to payments made to any other creditors, and senior secured lenders are the first to be paid back in the event of default, ahead of all other outstanding debt or equity holders.

These loans are “secured” because they have a first priority claim on the borrower’s assets. If the borrower were to default, the senior secured lender would receive all of the company’s cash flow and be able to receive all proceeds from the sale of its assets until it is paid back in full, at which point the other creditors would be able to make a claim on the borrower’s remaining cash flow or assets.

given their historically stable prices over the long term and their floating interest rates, leveraged loans have exhibited relatively low volatility, resulting in a potentially attractive risk-adjusted return for investors. Fixed income product rates do not adjust and therefore do not offer the same protection in times of inflation and rising interest rates.

Senior secured loans have also tended to show low correlation to other asset classes and thus can be utilized to lower the risk of a portfolio without sacrificing return. Senior secured loans can reduce a portfolio’s overall risk because they tend to perform independently of traditional assets, which can be extremely important when stocks and bonds suffer declines in value.

It is worth noting that the attractiveness of the senior secured asset class has not been lost on the capital markets. Nearly $7.8 billion in capital was invested by retail investors in the senior secured market during 2012. The asset class continues to be attractive due to its security, its floating rates and its ability to generate meaningful current income.

However, not all senior secured loan products are the same. Floating rate mutual funds may be limited by their mandate or be restricted by their need for liquidity. look for products with flexible investment structures that allow managers to invest in similar assets outside of their core strategy. Find a manager with an established origination platform and one who has the capability to source proprietary transactions. ¢



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FSI Leading the Charge for Small and Mid-sized FirmsAs broker-dealers across the country face continuing uncertainty in 2013, FSi is dedicated to advocating for the interests of firms of all sizes throughout the independent advisory industry. The selection late last year of David Stringer, President of Prospera Financial Services of Dallas, Texas, and Steve Chipman, CEO and President of Foothill Securities of Mountain View, California, to FSI’s Board of Directors underscores our commitment to further strengthening our ties to small and mid-sized firms in 2013.

We are proud to note that four of the sixteen members of our Board now represent small or mid-sized firms.

“The advisory business overall is tough enough,” said Chipman, whose firm has over 200 advisors. “But for those within the independent space, the challenges from both a regulatory and business perspective are just enormous, and to be part of an industry group that represents only independent financial advisors is enormously valuable for us.”

Participating in FSI — and being enthusiastically engaged in its mission of advocacy at both the firm and advisor level — is helping Foothill continue to build and strengthen its position as a unique provider of valued advice and service to clients, says Chipman. With FSI as its ally in Washington, D.C., and throughout the country, chipman is confident that Foothill’s model of smart, selective growth, coupled with a culture of partnership and collegiality, will continue to see success going forward.

“ In helping their clients plan for retirement, our advisors are changing lives.”

“We think it’s an ideal model within this independent space,” he said. “ultimately, we want to create the kind of firm where people are knocking on the door to get in, and the only way we will be able to reach that goal is with everyone acting as true partners.”

Despite the challenging environment of the last several years, Foothill has thrived, with revenue increasing by nearly $23 million over the last six years. Chipman said none of it would have been possible without FSI’s advocacy efforts.

“When there’s not an alignment of interests, business decisions tend to get made for firms,” chipman said. “Because of FSi, firms of our size are charting the path they want to chart.”

Stringer echoes Chipman’s thoughts on the link between FSI’s mission of advocacy and his firm’s strategic outlook for the future. The president of Prospera, which has 120 advisors and approximately $5 billion in assets under management, is eager to add his voice to FSI’s ongoing efforts to contain the ever-expanding regulatory burdens being placed upon independent broker-dealers, as well as the attendant costs.

He is particularly concerned with the Department of Labor’s effort to impose a new fiduciary standard on advisors who work with IrAs, which could eliminate commission-based compensation for these accounts. “What I’d like to see is how we can make regulations more effective, rather than for regulators to just keep piling on more,” he says.

For a firm like Prospera, having to devote more resources to comply with new regulations can take a significant toll on operations and growth, says Stringer. Fortunately, FSI’s strong and consistent advocacy on behalf of the industry is helping Prospera meet this challenge, enabling the firm to continue its growth trajectory while preserving the core elements of the business that are important to its advisors and clients.

“We very much value our culture,” Stringer said. “And while we are trying to garner scale, we don’t want it to come at the expense of our culture. the makeup of our firm is very much a strategic asset.”

Stringer hopes to emphasize the message that many small firms are realizing continued success despite the challenging climate. He believes that Prospera will likely double in size over the next few years through a combination of organic growth and disciplined advisor additions.

“there’s this view in the industry that small firms are not going to survive,” Stringer says. “As part of the FSI Board, I look forward to contributing a voice that says, ‘there are some small firms out there that are doing very well, that run their businesses very effectively and are growing.’”

Chipman and Stringer are both keenly aware of — and grateful for — the role FSI plays in standing up for the interests of independent broker-dealers and financial advisors, and for the interests of their clients, as well.

“In helping their clients plan for retirement, our advisors are changing lives,” Chipman said. “But the industry is under fire from regulators who don’t understand our business.”

Through their work on the FSI Board, both Chipman and Stringer are determined to make sure they do. ¢


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ONEVOICE 2013

Here’s what you missed in sunny San Diego...

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Be Sure Not to Miss Next Year!2014 ONEVOICE: 10-yEar aNNivErsary!

JANuArY 27 – 29 IN WASHINgTON, D.C.

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Advocacy FocusIn the wake of the financial crisis, it seems that the regulatory agencies have been given free rein to foist an additional layer of oversight on the independent advisory industry with each passing day, blurring what is already a cloudy regulatory landscape, and creating an environment of great uncertainty for independent financial advisors and their broker-dealers.

One area that has proved especially confusing for some has been the disparate visions the SEC and the Department of Labor (DOL) have concerning the term “fiduciary.” And to FSi Executive vice President and general Counsel David Bellaire, the industry’s uncertainty over these two definitions is understandable.

“the term ‘fiduciary,’ legally speaking, has a spectrum of meanings,” he said. “As a matter of policy, though, it should mean the same thing to both agencies. But in practice it is applied very differently depending upon the context.”

Bellaire said that nearly all advisors are intimately familiar with the SEc standard, which states that advisors must disclose conflicts of interest up front to clients, seek to minimize their impact and manage them properly through Form ADV. The advisor and client will then decide whether they can work together given any existing conflicts.

“ FSI supports the adoption of a clearly stated universal fiduciary standard of care, across all regulatory agencies.”

The DOL standard, in contrast, is much more restrictive, in large part prohibiting advisors from engaging in transactions that, in the department’s view, present a conflict of interest. As Bellaire emphasizes, advisors need to understand that complying with the DOL standard involves substantially different processes and oversight than compliance with the SEC standard, since disclosure alone is insufficient.

Therein lies much of the problem with the DOL requirements, Bellaire said.

“regulators, not the advisor, make decisions about conflicts and how they are managed,” he explains.

If advisors get confused, they are not alone. Studies have shown that investors fail to understand differences between the standards of care enforced by the DOL and SEC, with many expressing doubt that there is a difference at all.

Clouding the picture even further is a widely anticipated move by the DOL in the second half of 2013, when Bellaire said the department is likely to expand its fiduciary definition to include services to IrAs and employer-sponsored retirement plans that have not been affected previously. The proposal is expected to add yet another grievous and unnecessary layer of regulation on investments that are already regulated vigorously by states, FINrA and the SEC — which is said to be considering its own revision within the next year.

“the DOl’s attempt to redefine the term ‘fiduciary’ has the potential to impose significant regulatory burdens on investment advisors and broker-dealers, as well as potentially creating conflicts with the fiduciary standard contemplated by the SEC,” Bellaire said.

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Mark Smith, a partner with law firm Sutherland, Asbill & Brennan LLP, who works closely with FSI on ErISA-related issues, agrees with Bellaire, saying that such a move will result in serious consequences for the industry, with the viability of long-established business models placed in serious jeopardy.

“Absent DOL approval, advisors will no longer be able to earn commissions on IrA or 401k accounts,” says Smith, an employee-benefits expert with over 31 years of consulting, transactional, regulatory and litigation experience.

“ The biggest winners of all: The millions of Main Street American investors who will continue to receive quality, professional advice concerning all their retirement accounts.”

While noting that the DOL currently allows a limited number of commission-based transactions between advisors and clients to take place under prohibited transaction exemptions (PTEs), Smith says that qualifying for a PtE can encompass significant costs, in both time and dollars. At the same time, he said that simply converting the affected investors into a fee-based relationship that complies with the SEc fiduciary standard — even if the investors were willing to do so — is not of itself a solution, since advisors would need to establish new ErISA compliance systems to meet the DOL standard.

As a result, Bellaire says, more middle class Americans — whose retirement security has become increasingly rooted in IrA and 401k plans — will be left to fend for themselves, because firms will be forced to rapidly flee the irA and 401k market.

To solve this problem, FSI supports the adoption of a clearly stated universal fiduciary standard of care, across all regulatory agencies. Bellaire says that he envisions a simple and consistent set of rules that contain effective and transparent customer disclosures. In such a scenario, everyone — financial advisors, broker-dealers and investors — wins, he says.

But the biggest winners of all: The millions of Main Street American investors who will continue to receive quality, professional advice concerning all their retirement accounts.

Without harmonization of a fiduciary standard, however, Smith says he expects something very different will occur.

“it’s important that we enhance professional financial advice for retirement savings,” Smith said. “But the DOL, in its quest to impose its own particular view of impartiality, will cause a reduction in the quality and amount of advice plan participants and IrA account holders receive, rather than enhance it. That’s my main concern.” ¢

|| CONTINuED FrOM PrEVIOuS PAgE

FSIVoice has gone Digital!. As good stewards of our members’ resources, the FSIVoice has gone all digital this year, and will no longer be sent through the mail.

Please watch your email for the next edition of the Voice coming Q2!





ADVOCACY IN ACTIONOne of FSI’s ongoing goals is to help members across the country understand how powerful the voice of the independent financial advisor can be in the regulatory and legislative process, especially when it is backed up by in-person engagement. Over the past year, FSi has expanded its efforts to help financial advisor members understand this crucial point by facilitating in-district, face-to-face meetings between members and their representatives in Congress.

Over the course of 2012, FSI coordinated 10 of these meetings, involving 36 FSI members.

FSI Vice President of Legislative Affairs robert Lewis, who leads this effort, says, “In all of these meetings, our goal is to let members of Congress know who we are, who our members are, and what our issues are.”

Sitting down with legislators in their own districts helps members communicate their thoughts and concerns in concrete and personal terms, while also reinforcing to lawmakers that financial advisors represent key constituencies in their own communities: small business owners, retirees and pre-retirees and a broad range of other Main Street investors.

“The in-district meetings give us a voice that we would not otherwise have with our representatives,” says rick Carlson, President and CEO of Carlson Advisors in Tomah, Wisconsin. “To begin with, you at least need to have an opportunity to sit down and meet with a representative, and FSI provides that,” he says. In October of last year, Carlson was joined by FSI and four other advisors in meeting with representative Sean Duffy for an hour-long discussion at his office in Wausau, Wi. “When you meet with your representative at the local level and you get the advisors together in the room, it really hits home. It provides the representative an opportunity to hear directly from their constituents,” Carlson says.

These meetings typically focus on the regulatory concerns central to FSI’s advocacy agenda, including the Department of Labor’s move to redefine the term “fiduciary,” which could ban the earning of commissions on irA advice; legislation that could force financial advisors to be employees of their broker-dealer; and the stark difference in regulation between rIAs and broker-dealers reps.

The conversations also include discussion of issues that are unique to each district and the concerns of the particular advisors in attendance. As Carlson notes, “With the onslaught of regulations, the meetings are a great opportunity to clarify how cumbersome and potentially detrimental some of these regulations can be, especially to the Main Street investor.”

The meetings also provide invaluable relationship building opportunities for FSI members. Says Carlson, “Our meeting allowed me to get to know representative Duffy along with his staff. I can call and speak directly to him or his legislative aides about the issues that are most important to our industry, and they

listen to what I have to say.” Additionally, rep. Duffy serves on the House Financial Services Committee and has reached out to Carlson for his opinion on a number of issues. “I am part of a small group of people he will send an e-mail to soliciting feedback in connection with an individual that is testifying as part of an upcoming hearing,” said Carlson.

Kive Strickoff, founder of Strickoff Financial Services in garden City, NY, agrees. After he and four other advisors sat down with Congressman Peter King in his local office in Massapequa, NY last August, Strickoff observed, “I had the opportunity to continue building my relationship with Congressman King. The in-district meetings have helped him gain familiarity with me and the profession that I represent.”

Meeting with legislators in their home districts — away from the constant demands of Washington, D.C. — provides a unique opportunity to build strong rapport and to discuss issues in depth, according to Strickoff. “When you meet with your representative outside of Washington, D.C., you have so much less pressure to pack in what you need to say in fifteen minutes or less,” he says.

The meetings can also serve as a helpful stepping stone for members who want to get more involved in FSI’s mission of advocacy, but might not know where to start.

legislators see a clear benefit in maintaining this direct level of communication with advisors in their districts, as well. “Peter King uses these meetings as a forum to keep his ear to the ground; to hear in concrete terms what is going on in his district,” said Strickoff.

In 2013, FSI plans to continue to build on its current momentum in facilitating these in-district meetings, and will work to develop strong, ongoing dialogue between legislators and FSI members on topics including possible tax reform proposals, the upcoming DOL fiduciary proposal and more.

Summarizing his experience with FSI’s in-district meeting initiative, Carlson says, “I think advocating at the local level allows FSI to provide a slightly different perspective with these representatives. It’s not some big lobbying organization in Washington trying to influence them. rather, it’s a small business owner like me, from Main Street America, that tries to demonstrate how regulation in Washington affects not only our business but our client’s access to financial advice.” ¢



Yes We Will!Reforming Regulation through Education and Representation

The Financial Services Institute (FSI) is your voice in Washington, D.C. and the states, helping to ensure that, one day, we will have a healthier, more business-friendly regulatory environment in which to thrive. But we need you to engage and stay active in FSI to effect change.

With your investment in FSI, we can say with certainty, Yes We Will!

P Yes We Will! reform regulation through education and representation in Washington, D.C. and the states. P Yes We Will! protect the independent business model. P Yes We Will! ensure our clients have access to quality, affordable financial advice and products. P Yes We Will! create a unified and effective voice for the industry that will reverberate from coast to coast. P Yes We Will! thrive one day in a healthier, more business-friendly regulatory environment.

“ Together, we’ll say Yes We Will! to a brighter future for independent financial advisors.”

Imagine running your business that you’ve poured your blood, sweat and tears into, in a world where you can’t charge a commission on IrA advice. Where your 12b-1 fees are gone, vanished into thin air. Where your independent contractor status is null and void and you are forced to be an employee of your broker-dealer. Where your clients cannot invest in variable annuities and other tax-deferred tools because Washington went on yet another revenue grab. Where Money Market Mutual Funds and Stretch IrAs are a thing of the past and are no longer options for your clients.

Don’t think this is possible? Well, this is the world you’d be living in now if it wasn’t for FSI and the strong engagement of our members.

When you see the option on your statement, please choose to join FSI.

Do it for yourself. Do it for our industry. Do it for your clients. Do it and, together, we’ll say Yes We Will! to a brighter future for independent financial advisors. ¢




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