RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of April 8, 2017

Posted by RIA in a Box

Apr 14, 2017 11:39:19 AM

Leave an RIA firm to start an independent RIA firm

Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser ("RIA") compliance and regulatory issues. This week's recap focuses on the Department of Labor ("DOL") fiduciary rule, succession planning, and the latest phase of the "breakaway broker" movement. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of April 8, 2017:

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  1. Overcome Succession Planning Paralysis (Author- Kelli Cruz, Financial Planning)

According to Financial Planning guest columnist, Kelli Cruz, "Succession is an integral part of a broader strategic planning process that seeks to address two important goals: how the business will grow and create value for clients, owners and employees, and how the business will be transitioned to a new generation while preserving its reputation and legacy." In addition, to the goals outlined by Cruz, succession planning is also essential as it relates to an RIA firm's fiduciary obligation to its clients. In Cruz's article, she gives insight into how firms can approach succession planning in the best possible way while forming a strategy. Included are four key points to the strategy as well as a succession planning checklist to help an advisory firm jump start the planning process.

  1. Why a Diluted Fiduciary Rule is Bad for Advisors: Betterment, CFP Board (Author- Bernice Napach, ThinkAdvisor)

Bernice Napach, Senior Writer for ThinkAdvisor, reports about the recent fiduciary round table discussion hosted by Betterment, the largest independent robo advisor. Napach notes the arguments put forth by Betterment, the Certified Financial Planner Board of Standards, and the Consumer Federation of America in favor of the current Department of Labor ("DOL") fiduciary rule. Jon Stein, Betterment CEO, believes, "no matter what happens after the delay ends on June 9, the fiduciary standard will eventually be adopted in the very long term." It's also important to note that it's highly likely that the June 9, 2017 applicability date for adherence to the rule's Impartial Conduct Standards will stand.

  1. DOL Fiduciary Rule Delayed--But It's Not Entirely What Was Expected (Author- Fred Reish, Bruce L. Ashton, Bradford P. Campbell, Joshua J. Waldbeser, Sandra Dawn Grannum, and Joan M. Neri, The National Law Review)

Industry professionals composed this article for The National Law Review discussing the Department of Labor ("DOL") delaying the fiduciary rule by 60 days as well as a few additional surprises impact financial advisory firms. The authors note that, "The expanded definition of 'fiduciary' investment advice will become applicable on June 9, 2017, rather than April 10, 2017." In particular the authors highlight the DOL's stance that, "There is widespread (though admittedly not universal) acceptance that the Impartial Conduct Standards are appropriate." Ultimately, the authors conclude, "Despite the DOL’s statement about the possibility of major changes, we do not think the Rule will be scrapped altogether."

  1. Big RIAs Now Face Their Own Breakaway Movement (Author- Matt Sonnen, Financial Advisor)

The "Breakaway Advisor Movement", when advisors began breaking away from the traditional wirehouses and large brokerages to establish an independent RIA firm seems to have started in the late '90s and early 2000's. Guest columnist for Financial Advisor, Matt Sonnen, writes that the industry is now beginning to experience a new wave of "breakaway advisors" with advisors already operating in the RIA space looking to leave larger firms to start their own independent RIA firms. Sonnen believes this latest phase of the breakaway movement, "will continue to attract the best and brightest due to its open architecture and unlimited opportunities to find the best models for serving both clients and employees."

  1. Fintech Firms Still See a Future for Fiduciary Compliance Tools (Author- Suleman Din, Financial Planning)

Financial Planning's Suleman Din reports on the latest software tools being released to assist with complying with the DOL fiduciary rule. Brian Jones, co-founder of Active Allocator, claims, "just because the rule may end up derailed, the need for advisers to upgrade their technology and be open with clients doesn't go away."  While the rule's future may be uncertain, it does appear to be creating increased client awareness and demand for advisers who act as a fiduciary. CEO of Boston-based FinMason, Kendrick Wakeman, says, "regardless of the outcome, the wealth management business needs to upgrade their technology across the board, and soon."

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Don't forget to check out last week's top RIA compliance news articles on the DOL fiduciary rule and the future of Dodd-Frank. Be sure to check back next Friday for next week’s top articles! 

Lexington Compliance and RIA in a Box LLC are not law firms, investment advisory firms, or CPA firms. Lexington Compliance and RIA in a Box LLC do not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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