FSI to Meet OMB On New Independent Contractor Rule
The Financial Services Institute, an advocacy group for independent financial advisors, will meet with the Office of Management and Budget next week to discuss a revised independent contractor rule put forward by the Department of Labor in early January.
David Bellaire, executive vice president and general counsel for the Washington D.C.-based broker/dealer lobby group, said seeing the new rule through to passage is among FSI’s key agenda items in 2026. The OMB generally has about 90 days to review new rules.
“During that meeting, we’re going to ask OMB to ensure that the forthcoming rule adopts a balanced framework that respects worker preference, preserves traditional independent contractor relationships and provides clear guidance that aligns with existing law and precedent,” Bellaire said.
Bellaire made the comments during a press briefing at FSI’s annual conference in San Diego and over video link.
FSI and other partners sued the DOL in 2024 over a Biden-era independent contractor rule intended to protect freelance and gig workers from being misclassified by employers, potentially limiting wages and worker protections. However, according to the FSI and other opponents, the rule would also threaten to reclassify 1099 advisors as employees, potentially creating reduced income, higher compliance costs and less overall operating freedom.
Bellaire also pointed to a longer-term policy push to pass the Modern Worker Empowerment Act that aims to protect independent contractors from “significant control” by employers in industries including financial services, primarily targeting workers such as freelancers, gig workers, nurses and truck drivers.
Opponents of the bill include the AFL-CIO, which argues that it will block protections for wages, overtime pay and work hours for contractors.
The act was introduced in the House by U.S. Rep. Kevin Kiley (R-Calif.) in early 2025 and in the Senate by U.S. Sen. Tim Scott (R-S.C.) in July; it is now with the Committee on Health, Education, Labor and Pensions for further review. Bellaire said the “window for passing legislation is quickly narrowing,” but that the act is a long-term goal to solidify an independent contractor setup that FSI can support.
Another major area of focus for FSI will be to push against “regulation by enforcement” that the FSI and others in the financial industry saw as prevalent during the Biden administration, as led by SEC Chair Gary Gensler. Many broker/dealers were hit by off-channel communication fines, as an example, which many in the industry argued was not clearly defined or laid out in regulation.
FSI had published a white paper it sent to the SEC in early 2024 that recommended a framework it said would “protect and prevent” unfair enforcement practices. Bellaire said getting those rules in place and then monitoring them is a “long-term” project, and that it remains relevant under the Paul Atkins-led SEC.
“One might think that we’d be less concerned about enforcement, but Chairman Atkins has been clear that his focus when it comes to enforcement is on retail advice,” he said. “So we remain vigilant as always to ensure that they’re protecting their clients.”
Brown noted that there is a congressional hearing on Thursday before the House Subcommittee on Capital Markets, where one of the attorneys who worked on the white paper will testify.
Brown also spoke to other ongoing initiatives by FSI, including broadening investor access to offerings by expanding the accredited investor definition, as well as backing SEC efforts to bring cryptocurrency guidelines further into the mainstream of financial offerings.
“Our advocacy priorities focus on expanding investor access and choice, preserving advisor independence, and supporting a transparent and practical regulatory framework,” Brown said. “As our world rapidly evolves, policies and regulations must align with modern business practices, promote innovation and protect investors.”
The FSI head also noted that the organization works across both sides of the political aisle, but that the chance to pass policies is narrowing due to the pending midterm elections, which may change the makeup of government.
“There are no easy wins to check off on the calendar for the rest of 2026, and a window of opportunity will close with the midterms, just because of the distraction,” he said. “The results of the midterms will [then] dictate how much that window stays open.”
During its update, the FSI also highlighted work on investor education and protection, including promoting financial literacy and supporting investment advisor advocacy efforts.