Representatives Introduce Legislation to Modernize Financial Adviser Payment Rules
A bipartisan duo in Congress, Reps. Zach Nunn (R-Iowa) and Gregory Meeks (D-N.Y.), have introduced the Clarity for Compensation Act, a bill aimed at modernizing how independent financial advisers are paid, a shift that advocates say is long overdue for an industry that often operates under rules dating back to the mid-20th century.
The independent financial services industry has evolved from solo practices to ensemble businesses – teams of advisers who share overhead, staff, and technology – that provide comprehensive financial planning services. However, for decades, the U.S. Securities and Exchange Commission has operated under an outdated framework in which securities commissions must be paid directly to individual advisers, not to their business entities, i.e., LLCs or S-Corps.
This framework led to inefficiencies, complicating payment of business expenses and hindering advisory practices’ ability to attract and compensate the next generation of advisers entering the industry.
In November 2025, the SEC issued a no-action letter granting limited relief for payments to ensemble practices; if passed into law, this new legislation would provide a more permanent solution. The Clarity for Compensation Act would create a permanent, statutory right for advisers to receive commissions via business entities.
Under the current rules, practices face administrative challenges when trying to pay common business expenses, and advisers face the threat of being told they must register as full “broker-dealers” simply for receiving earned commissions through a business bank account.
“As the industry evolves, the rules must also modernize to meet the needs of advisers, firms and, most importantly, American investors,” said Dale Brown, president and chief executive officer of the Financial Services Institute, an advocacy organization for independent financial services firms and advisers. “Independent financial advisers need clarity and certainty that receiving commissions through their business entities will not expose them to claims by a future SEC that they are required to register as broker-dealers.”
The Association of African American Financial Advisors, or Quad-A, has also lauded the bill as a matter of equity. By allowing practices to receive payments as entities, firms can more easily offer the stable compensation needed to recruit a more diverse next generation of advisers.
“Independent financial advisers are small-business owners, and the current rules create unnecessary administrative burdens that hinder reinvestment in their businesses and growth,” said Dr. Alex David, board chair, president and CEO of Quad-A. “Removing these barriers will help practices attract and hire new, diverse talent, particularly young professionals who rely on salaries as they establish themselves within the profession.”
Looking forward, the legislation has been referred to the House Financial Services Committee and awaits a hearing date.
Earlier this month, AltsWire highlighted the five new members of FSI’s board of directors as well as named its 2026 executive committee. The appointments reflect a broad cross-section of leaders from across the independent financial services community.
Representative Meeks also recently sponsored the Incentivizing New Ventures and Economic Strength Through Capital Formation Act (H.R. 3383), also known as the INVEST Act, a package of over 20 bills aimed at expanding the accredited investor definition and increasing access to 403(b) plans, as well as creating an SEC task force to focus on senior investor fraud.
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