RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of July 22, 2017

Posted by RIA in a Box

Jul 28, 2017 2:22:52 PM

RIA compliance succession plan options

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 and how to establish a succession plan. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of July 22, 2017:

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  1. How changes to the fiduciary rule could prompt adviser movement (Author- Mark Elzweig, Financial Planning)

Mark Elzweig offers his take on how the fiduciary rule will affect things like recruiting and “adviser movement”. He adds that the lack of clarity on the rule is a major hurdle, stating, “Advisers can't make strategic business decisions if they don't know what the rules of the game are.” Elzwig also parallels this situation with the one directly after the crash of 2008. “The following year was a record-breaker for adviser movement. Advisers offered clients a fresh start at a new firm while shoring up their own net worth by cutting deals with rival firms.”

  1. 4 steps to get a succession plan underway (Author- Sarah Martinson, Financial Planning)

Sarah Martinson reports on a succession planning webinar for advisors hosted by Tim Chase and David DeVoe. To begin succession, Chase says, “You have to start this process before you think you are really ready to. The earlier you start, the more successful you are going to be.” A large majority of firms stated they had no plan for succession when polled. Martinson sums up the steps by saying to get started quickly, consider mergers and acquisitions, choosing the right successor, and tailoring an agreement and transition.

  1. Show Me the Money: Taking the Fiduciary Debate to the Bottom Line (Author- Bob Clark, Think Advisor)

Bob Clark considers the DOL rule debate, stating that “Part of acting in a client’s best interest is that the advisor must consider the ‘cost’ of the recommended investments”. He argues that this is really what’s at the heart of the debate over the DOL Fiduciary rule. “As we all know, all those fees, and expenses, and loads over many years, have a substantial impact on investors’ portfolios. Yet the financial services industry would have investors believe they are just ‘minor costs’.”

  1. Open Letter to the DOL and SEC: Markets Deserve Clarification on the Duty of Care (Author- David Trainer, Wealth Management)

David Trainer pushes for clarity on the DOL rule and the “Duty of Care.” “Many throughout the industry are still unclear as to how to fulfill the Duty of Care. This uncertainty, at least in part, is behind opposition to the rule,” Trainer says. He wants the research into investments to be comprehensive, objective, transparent, and relevant to create this clarity on the rule and duty. He also states that the Securities and Exchange Commissions ("SEC") and DOL should step forward to lead advisers on this matter.

  1. SEC boss Clayton wants to tackle fiduciary rule, shareholder proposals (Author- Sarah N. Lynch, Reuters)

According to Reuters reporter, Sarah Lynch, SEC Chairman Jay Clayton is looking to work with the DOL on its Fiduciary rule. Most of the rule is now on hold due to the DOL asking for additional comments. Clayton says, “It would be extremely disappointing to me if whatever direction we go here resulted in a substantial reduction in choice for the individual investor." Lynch reports “the Chamber previously sued the government to prevent the fiduciary rule's implementation. It has also called for reforms to rules governing shareholder proposals and the role of proxy advisors play in corporate elections.” 

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Don't forget to check out last week's top RIA compliance news articles on the DOL fiduciary rule and how breakaway brokers can select the right technology. 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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