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IAA Presents List of Critical Adviser Issues, Regulatory Challenges To New SEC Chair as He Formulates His Regulatory Agenda

May 19, 2021

IAA Vice President, Communications & Marketing Herb Perone.


Washington, DC (May 19, 2021) – Sustainable investing, proxy voting, modernization of the Custody and Pay-to-Play Rules, e-delivery, investor testing of Form CRS, appropriate regulation of smaller advisers, effective coordination with other regulators, and promotion of diversity, equity, and inclusion are among the issues the IAA is asking SEC Chair Gary Gensler to include in his regulatory priorities.

In a May 17 letter – its first formal communication with new Chair – the IAA welcomed Gensler and outlined critical policy issues and regulatory challenges facing the approximately 13,000 federally registered fiduciary investment advisers under the SEC’s primary jurisdiction – noting that those challenges and how they are addressed impact those advisers’ more than 42 million clients.

“Fiduciary advice has never been more important to consumers’ ability to save and invest for the future,” IAA President & CEO Karen Barr wrote to Chair Gensler. “As fiduciaries, investment advisers have a special relationship of trust and confidence with their clients, acting in their clients’ best interest throughout and with respect to all aspects of their advisory relationship.”

Policy Issues

The IAA letter lays out the following policy positions for Gensler to consider as he develops his regulatory priorities:

  • The IAA believes that the standards of conduct rulemaking package contains the tools to achieve its investor protection goals through the SEC’s meaningful interpretation, implementation, and enforcement of its provisions. The IAA also supports the need for investor testing as to the effectiveness of Form CRS, and stands ready to work with the Commission to ensure the package as implemented is effective in educating and protecting investors.
  • The IAA supports policies that facilitate advisers’ ability to engage in sustainable investing, including development of a framework for issuer disclosure to inform such investing.
  • The IAA supports promoting the values of diversity, equity, and inclusion at all levels of the investment adviser industry.
  • The IAA believes that regulation should be strategyneutra Investment advisers should have the flexibility to consider factors and pursue investment strategies that best meet their client’s specific goals and policy should not explicitly or implicitly favor one type of investment strategy over another.
  • The IAA also believes that regulation should be technology neutral in order to foster innovation and efficiency in our capital markets, while maintaining investor protection. For example, as the SEC has recognized, the use of technology by digital advisers to offer investment services does not change the fiduciary nature of their advice or the regulatory environment in which they operate.
  • Smaller advisory firms face unique challenges as small businesses. The IAA recommends that the SEC consider the economic impact of regulations on smaller advisory firms more carefully, and conduct a more realistic assessment of the cumulative impact of policy and regulatory decisions on these firms’ businesses and their ability to serve the investing public.
  • The IAA supports the dedication of robust SEC resources for investment adviser oversight. The IAA believes that the SEC – an experienced and accountable government regulator – is in the best position and should continue to provide direct oversight over advisers and should be appropriately funded to do so.

Recommendations for the SEC’s Regulatory Agenda

In its letter, the IAA supports “adhering to the overarching principle of making regulations efficient, effective, and appropriately tailored to the stated objective. This includes applying more robust and comprehensive cost-benefit analyses to regulations, both new and old, as well as consideration of alternative approaches to regulation and factoring in the complexity and cumulative effect of all applicable regulations.”

The IAA made these specific recommendations for the agency’s rulemaking agenda:

  • Modernization of the SEC’s framework for delivery of required information by facilitating e-delivery of client communications as the default option.
  • Reconsideration by the SEC of recent actions that make it more difficult and more expensive for investment advisers to engage in proxy voting on behalf of their clients, or to use proxy advisory firms, a focus on improving proxy infrastructure.
  • Reconceptualization and rewriting of the Custody Rule under the Advisers Act to better achieve the goal of safeguarding client assets while reducing confusion. The IAA also recommends that the SEC adopt a principles-based approach to the safekeeping of digital assets, which would allow for continued evolution in this space.
  • Streamlining and updating the unnecessarily complex Pay-to-Play Rule.

SEC Coordination with Other Regulators

Coordination and cooperation among regulatory agencies is crucial for addressing certain issues effectively and for minimizing the impact of conflicting regulatory requirements on advisers. The IAA’s letter makes these specific recommendations in this regard:

  • Unified, federal coordination to address data breach, cybersecurity, and privacy regulation in order to create consistency and reduce complexity. A complex maze of federal and state requirements makes implementation and compliance extremely challenging and underscores the need for a uniform federal response.
  • As the primary regulator of investment advisers with deep expertise in this area, the SEC should take the lead for the Financial Stability Oversight Council (FSOC) in evaluating any risks that may arise from asset management.
  • Strong coordination and information sharing among both U.S. and international financial regulators to ensure that requirements imposed benefit from shared expertise and minimize inconsistency.

The IAA’s complete letter to Chair Gensler is available online.


About the IAA

The IAA is the leading organization dedicated to advancing the interests of investment advisers. For more than 80 years, the IAA has been advocating for advisers before Congress and U.S. and global regulators, promoting best practices and providing education and resources to empower advisers to effectively serve their clients, the capital markets, and the U.S. economy. The IAA’s member firms manage more than $25 trillion in assets for a wide variety of individual and institutional clients, including pension plans, trusts, mutual funds, private funds, endowments, foundations, and corporations. For more information, visit or follow us on LinkedIn, Twitter and YouTube.

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