CFP Board and Other Financial Planning Organizations Urge SEC to Update Outdated "Small Entity" Investment Adviser Definition for Rulemaking Analysis

CFP Board, along with the Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), and XY Planning Network (XYPN) submitted a comment letter to the Securities and Exchange Commission (SEC) supporting the need to update the "small entity" definition for investment advisers under the Regulatory Flexibility Act, an analytical framework that requires the SEC to assess the economic impact of its rulemaking on small entities and to consider regulatory alternatives that minimize burdens while still achieving a rule's objectives.

CFP Board, FPA, NAPFA, and XYPN agree that the SEC’s current $25 million regulatory assets under management (RAUM) threshold is outdated and requires updating, but suggest that a threshold based on firms’ employee counts may better capture the regulatory burdens small businesses face than an RAUM-based standard. To the extent the SEC proceeds with its proposal to raise the RAUM threshold to $1 billion RAUM from $25 million, the organizations urge the SEC to provide further data-driven explanation to support its proposed amendment.

To read the full letter, please click here.