Many people believe the economic collapse of the late 2000s and subsequent recession was caused, at least in part, by a lack of regulatory oversight. In response, Congress currently is considering a bill—the Investment Advisers Oversight Act of 2012 (H.R. 4624)—that would subject small and mid-level financial advisers to increased oversight at the hands of a self-regulatory organization.

This proposed legislation would significantly increase the oversight and testing to which smaller and mid-level advisers are subject, resulting in increased oversight fees for these same advisers. Consequently, it is important that the potentially affected advisers understand the proposed legislation, how it will impact their examination requirements and their bottom line.

Current Oversight Scheme Inadequate