House Committee Unanimously Advances Clarity for Compensation Act

The House Financial Services Committee unanimously advanced the Clarity for Compensation Act on June 30, voting 51-0 to send the bill, as amended, to the full House.

The bill, H.R. 7187, is sponsored by Rep. Zach Nunn, R-Iowa, and co-led by Rep. Gregory Meeks, D-N.Y. Nunn and Meeks introduced the legislation in January 2026.

The Clarity for Compensation Act would amend the Securities Exchange Act of 1934 to exempt a “personal services entity” owned by a registered representative from the definition of a broker, solely because the entity receives compensation on the representative’s behalf. The exemption applies only if the representative’s broker directs and approves the payment amount and timing, the entity does not hold itself out as a broker or engage in broker or dealer activity beyond receiving that compensation, the broker maintains supervision and control over the representative, and the broker and entity have a written agreement governing the arrangement. Ownership of the entity is limited to the registered representative, the representative’s immediate family, or entities wholly owned by them. The provision would take effect 180 days after enactment.

Under current rules, financial advisers are often barred from routing commission payments through their own business entities – a restriction other licensed professionals, including lawyers, accountants, and insurance agents, don’t face. The bill’s supporters say the change would let advisory practices structure compensation the way many now operate, as multi-adviser firms with staff rather than solo practices.

The Financial Services Institute, Finseca, and the Association of African American Financial Advisors (Quad-A)praised the committee’s vote in a joint statement.

“We thank the House Financial Services Committee for advancing this important legislation that aligns commission payment rules with modern business practices,” said Dale Brown, Financial Services Institute president and chief executive officer. “Independent financial advisers are business-owners serving clients in their communities across the country. The Clarity for Compensation Act eliminates operational inefficiencies, supports succession planning and helps attract the next generation of financial advisers – ultimately strengthening Americans’ access to professional, objective financial advice.”

Finseca CEO Marc Cadin and Quad-A CEO Sheena Gray also issued statements supporting the bill’s advancement. The National Association of Insurance and Financial Advisors backed the measure separately.

The legislation follows a recent U.S. Securities and Exchange Commission no-action letter that provided temporary relief for similar compensation arrangements; supporters say the bill would make that relief permanent. The bill now awaits scheduling for a vote by the full House.

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