The House Financial Services Committee voted 55-0 on June 30 to advance the Clarity for Compensation Act, a bipartisan bill that would permanently allow registered representatives to receive commission payments through their personal services entities. Sponsored by Rep. Zach Nunn (R-Iowa) and Rep. Gregory Meeks (D-N.Y.), the legislation now heads to the full House for consideration.
Under current rules, commission payments must flow directly to individual advisors, a structure that industry groups argue is outdated and inefficient for modern advisory teams. The bill would align compensation rules with how lawyers, accountants, and insurance agents have long operated—receiving income through their own business entities. The change is designed to give advisory firms greater flexibility to invest in their operations, develop employees, and improve client service.
The Financial Services Institute (FSI), Finseca, and the Association of African American Financial Advisors (Quad-A) issued statements praising the committee's unanimous vote. FSI President and CEO Dale Brown said the measure eliminates operational inefficiencies, supports succession planning, and helps attract the next generation of advisors. "Independent financial advisors are business-owners serving clients in their communities across the country," Brown noted.
Finseca CEO Marc Cadin highlighted that the legislation builds on a recent SEC no-action letter that provided temporary regulatory relief for certain compensation arrangements. Cadin called the bill a "commonsense update" that reflects how advisory teams actually operate and will help attract, train, and retain diverse financial security professionals.
The National Association of Insurance and Financial Advisors (NAIFA) also applauded the committee's support. NAIFA President Christopher Gandy emphasized that independent advisors are small business owners who deserve the same flexibility as other professionals. "Removing these outdated barriers will help advisors spend less time navigating unnecessary regulations and more time serving the individuals, families, and businesses that rely on their guidance," Gandy said.
The bill's passage comes amid broader regulatory shifts affecting advisor compensation. A recent study found that CFP certification boosted median compensation by 15% to $195,000, outpacing inflation for the third consecutive year. Meanwhile, RIAs continue to lag in advisor pay compared to other channels, underscoring the importance of compensation modernization.
Industry observers note that the Clarity for Compensation Act could also ease succession planning, a persistent challenge for an aging advisor workforce. By allowing payments to flow through business entities, advisors can more efficiently transition their practices to successors without triggering complex tax or regulatory issues.
The bill now awaits floor action in the House. If enacted, it would provide permanent relief from the current individual-payment requirement, replacing the temporary SEC no-action letter that expires in 2025. Supporters are optimistic that the unanimous committee vote signals strong bipartisan momentum for the measure.
