There are a number of  reasons why FINRA does not need to extend it's reach into the independent RIA industry but chiefly among them is that they've proven themselves to be an annoyingly incompetent within the BD community adding complexity, confusion, and conflict wherever they go.  Here are my reasons:

1. The RIA's already have a regulator-The SEC.  The SEC can do this because they are obviously doing nothing else at the moment.  By the way, there's a statute that gives them this authority no matter what FINRA calls itself.  Call me crazy here but I thought them naming themselves as an AUTHORITY was PRETTY BOLD.  Now I know it was just preamble.

2.The RIA's haven't been given a chance at an SRO- It's interesting that FINRA, an SRO, is against another SRO forming. Sounds like territoriality and protectionism masquerading as consumer advocates.  This is nothing more than the Crips and the Bloods duking it out. Think East LA instead of Wall Street without the great tattoos, vulgarity, and drugs.  Well, maybe just the vulgarity..

3.FINRA doesn't know what it's doing in this area- There's an old adage that those that can...do and those that can't.... teach.  Same thing is true in the financial services arena: Those that failed in the business go on to regulate it.  Even if you didn't fail why would you want to spend your life checking advertising on building directories or whether e-mails went out to more than one person.

4. RIA's already understand font size- Most RIA's have been operating at the top of the investment intellectual food chain for a while. They get packaging, design, and symmetry.  They don't need someone to come in and debate the merits of 14 pt. Times Roman vs. 10 pt. Ariel.  And I won't even get into FINRA's problems with the color wheel.  My personal observation is that they have an organizational bias against pastels.  I know it's certainly true when you're wearing chiffon tops and leather slacks when they're in your office.

5. RIA's don't serve dinner to get clients- A big part of FINRA's regulatory push in the last year has been clamping down on senior lunches in Florida.  A good endeavor, considering the major firms it was supposed to be watching just robbed billions from investors with the sub prime stuff.  RIA's who are affluent and serve the affluent eat at the Four Seasons in groups of 4-6, chew with their mouths closed, and know that Cabernet is not a musical.  FINRA's groups are at the Las Quintas in Sarasota following Rotary on Tuesdays.

6.RIA's are already fiduciaries- A big part of FINRA's efforts has been avoiding telling mother Merrill to shape up or ship out on the fiduciary thing.  So far, it's been a really bad version of, "You do that one more time and you'll see what you get", when it comes to enforcing the rule.  FINRA needs to tell RIA's to be fiduciaries like it needs to tell Priest to wear a white collar.:

7. RIA's do not need to become dues paying members of FINRA's already bloated bureaucracy- The only group of people that have more swarms of useless people crossing lines is the illegal immigrant crowd in Juarez.   Having 30,000 more people to regulate means FINRA gets as big as the Girl Scouts with the demeanor of the folks at GITMO.

8.RIA'S  don't sell the stuff FINRA's familiar with- RIA's are actually, believe it or not, trying to adhere to certain standards around the managment of money as opposed to adopting those from someone who sponsors an annual convention.  They see themselves as fiduciaries, act as fiduciaries, and treat their clients as loved ones. 

9.RIA's are too sedate for FINRA- Most technically oriented portfolio managers I know in Charlotte, NC have the charisma of a bird postage stamp.  When I used to go to the money managment meetings with my client's advisors I had ammonia tablets in my pocket for when the manager drifted into his head and shoulders, efficient frontier, sector waiting, PE multiple lecture.  Honest to God, they should just tape those things so you can listen to them like you do the tour at Graceland or Alcatraz.

10. RIA's are too smart for FINRA- I've been reviewed in my days as an advisor under the old NASD organization (what FINRA was while it was an AUTHORITY in training).  Except for checking spelling, whether things were in alphabetical order, cancelled checks, and the blotter, the greatest intellectual inquiry was, "Are those paintings real?"

FINRA needs to stay right where it is in it's own big, muddy, conflicted, confused, and despised back yard.  The RIA's need to patch up their fence before FINRA wriggles underneath it.