Bill Overview
Title: Access to Small Business Investor Capital Act
Description: This bill allows a registered investment company to exclude from the calculation of acquired fund fees and expenses those incurred indirectly from investment in a business development company. Instead, such fees and expenses may be disclosed in a footnote. Acquired fund fees and expenses is a required line item on a fund's fee schedule that provides the operating expenses of the fund.
Sponsors: Sen. Daines, Steve [R-MT]
Target Audience
Population: Investors in registered investment companies and small- and medium-sized businesses benefiting from BDCs
Estimated Size: 2000000
- The bill pertains to registered investment companies, which affects the operational and reporting aspects of these entities.
- Business development companies (BDCs) are investment vehicles that support small- and medium-sized companies, and any changes in their reporting could impact their attractiveness as investments and their operational capital.
- Indirectly, small- and medium-sized companies may see impact as the BDCs that invest in them may have slightly altered dynamics in raising and allocating investment capital due to these changes.
- Investors in registered investment companies could be impacted due to changes in the fee reporting, potentially affecting investment decisions.
Reasoning
- I selected individuals who would directly or indirectly interact with investment companies or the markets they influence. These include small business owners and investors in business development companies (BDCs).
- The impact is likely moderate to high on financial professionals and BDC investors due to direct interaction with the changed reporting practices.
- Small business owners' well-being might be influenced moderately due to the indirect nature of this policy on fundraising opportunities through BDCs.
- Given the budget and the broad potential audience of BDCs (up to 2 million Americans affected), a diverse sample set was selected to reflect both direct and indirect impacts.
- Investors and managers who are part of large registered investment companies might find the change reducing administrative burdens, thus enhancing professional well-being slightly.
Simulated Interviews
Portfolio Manager (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- This policy would simplify our fee reporting process, potentially making our BDC investments more attractive.
- Understanding fees comprehensively can lead to better investment strategies and decision-making.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Tech Startup Founder (San Francisco, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- Easier access to capital through improved reporting could boost our chances to secure further BDC investments.
- Our expansion plans hinge on investor confidence, which this policy could positively impact.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Small Business Owner (Chicago, IL)
Age: 54 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- BDC funding could be a vital expansion route for us.
- Red tape and complex fee disclosures are often a hassle, so any streamlining is welcome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 7 |
Financial Analyst (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Clarity in BDC fee structures could simplify my evaluations, aiding better client advice.
- This policy might steer more clients towards BDC investments, impacting our firm positively.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Retiree Investor (Miami, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Anything making BDC investments clearer and potentially cheaper helps me make better investment choices.
- I rely on transparency to manage my retirement funds.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Consultant (Los Angeles, CA)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Policies that streamline operations can enhance how BDCs operate.
- More efficient fee disclosures can lead to better strategic planning for clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Entrepreneur (Seattle, WA)
Age: 37 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- BDC participation is central to our growth plans; any enhancement in capital access is beneficial.
- Transparent fee structures could make BDCs more appealing to new investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 7 |
Banking Executive (Boston, MA)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Policy changes that clarify fee reporting directly impact our strategies for recommending BDCs.
- Could potentially drive up clientele interest in BDC strategies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 9 |
Freelance Financial Writer (Portland, OR)
Age: 27 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- New policies change investment advice and product attractiveness, requiring updated content.
- This act may make BDCs less daunting to new investors, which can be a narrative for my audience.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Independent Investor (Atlanta, GA)
Age: 64 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- It’s crucial for me to know where my fees are applied in any investment, especially BDCs.
- This seems like it might reduce decision complexity, potentially enhancing our club's strategic confidence.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $2000000 (Low: $1500000, High: $3000000)
Year 2: $0 (Low: $0, High: $0)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The real impact of the legislation is on administrative and reporting protocols, impacting investment company expenses minimally.
- Indirect effects might ripple into how BDCs leverage investment, which could impact small- and medium-sized businesses seeking capital.
- Changes in fee disclosure could impact investor behavior due to perceived changes in investment costs.