In 2019, we published over 100 blog posts on a variety of registered investment adviser ("RIA") practice management and regulatory compliance topics. We received over 170,000 visits to our blog in 2019 and a number of the most popular posts relate to practice management and regulatory topics ranging from technology adoption to cybersecurity. Over 1,800 RIA firms rely on us not only for regulatory compliance consulting support and software, but also for guidance on how to best grow and scale an advisory firm.
Here's our top 10 practice management blog posts from 2019 highlighting some of the topics we frequently discuss with our clients:
This blog post was published after the Securities and Exchange Commission ("SEC") finalized a new rule outlining a new requirement for SEC-registered investment adviser ("RIA") firms to provide a brief relationship summary to retail investors known as the Form CRS. This post dives into the rationale for the new Form CRS, which RIA firms are impacted by the new rule, when applicable RIA firms need to initially file and deliver the Form CRS to clients, and the required format of the new Form CRS. The new Form ADV Part 3 ("Form CRS") will be in addition to the currently required Form ADV Part 1 and Part 2 Brochure.
- An Overview of the 5 Required Form CRS Items for RIA Firms (June 13, 2019)
- A Look at Outsourced RIA Portfolio Management Trends and Fees (August 6, 2019)
The findings in this blog post come from our annual survey of over 1,350 RIA firms that was conducted in the first quarter of 2019. The focus of this blog post is to explore outsourced portfolio management fees and and trends related to portfolio management outsourcing based on current and past survey data. According to our latest survey, the number of RIA firms presently outsourcing portfolio management is 21%. An increase from last year's survey which revealed that 20% of RIA firms were outsourcing portfolio management.
The findings in this blog post come from our annual survey of over 1,350 RIA firms that was conducted in the first quarter of 2019. While the drumbeat around potential investment adviser industry fee compression seems to get louder each year, this year's survey findings closely mirror our findings from recent years with an average advisory fee of 0.96%. The advisory fee of 0.96% is up slightly from our 2018 survey results which showed an average advisory fee of 0.95%. In general, advisory fees charged by RIA firms have held steady in recent years. The post continues to discuss average advisory fees charged based on in-house vs. outsourced portfolio management, average advisory fees charged based on active vs. passive portfolio management style, and average advisory fees charged based on type of investment securities.
In May of 2019, RIA in a Box released their cybersecurity compliance platform. The MyRIACompliance cybersecurity platform builds upon the NIST cybersecurity framework to help your firm implement a robust cybersecurity compliance program. NIST is the acronym for the National Institute of Standards and Technology, a government agency within the U.S. Department of Commerce that fosters cybersecurity research, education, and collaboration. As part of that effort, NIST has developed a cybersecurity framework to help organizations of all sizes to identify, assess, and manage cybersecurity risks. Notably, the SEC not only utilizes the NIST framework to help manage its own cybersecurity program, but has also commonly referenced the approach when issuing information security guidance to investment advisers.While no system can fully protect your firm from an information security incident, the MyRIACompliance cybersecurity platform has been designed to efficiently construct, implement, and document a robust cybersecurity compliance program. Doing so not only helps your RIA firm meet its regulatory obligations, but also trains and educates your staff to help reduce the firm’s cybersecurity risks.
- RIA Cybersecurity Focus: 3rd Party Vendor Management (January 8, 2019)
Beginning in 2014, the Securities and Exchange Commission ("SEC") has issued a series of registered investment adviser ("RIA") risk alerts highlighting cybersecurity as a key compliance concern. In particular, on September 15, 2015, the SEC Office of Compliance Inspections and Examinations ("OCIE") issued a risk alert flagging vendor management as one of six critical cybersecurity focus areas. Subsequent SEC OCIE risk alerts and guidance have also continued to identify third party vendor management as a critical cybersecurity risk area. As more RIA firms migrate to cloud-based technology and vendors, proper vendor management and due diligence is becoming an even more important element of every investment advisory firm's cybersecurity compliance program.
- RIA Business Continuity and Disaster Recovery Planning (March 26, 2019)
Many RIA firms haven’t thought about what would happen to their business in the cases of death, being disabled, or even natural disaster. Even if the firm does have a plan, it is often outdated or the designated person(s) of succession are not aware of the decision or don’t have the proper instructions to move forward in the case that the firm experiences an interruption. The objective of establishing a business continuity plan is to hold the firm to their fiduciary obligations and minimize any potential harm to clients due to service interruption.
- 2019 RIA Industry Study: Total Average Fee is 1.17% (July 18, 2018)
The findings in this blog post come from our annual survey of over 1,350 RIA firms that was conducted in the first quarter of 2019. The focus of this blog post is to explore the total average total fees an investment advisory firm charges, including advisory fees and all underlying investment product or manager fees. This year’s average total advisory fee including all underlying investment product of manager fees is 1.17% This is a slight decrease from last year's average total fee of 1.22%. The post continues to discuss average total client fees charged based on in-house vs. outsourced portfolio management, average total client fees charged based on active vs. passive portfolio management style, and average total client fees charged based on type of investment securities.
- SEC Proposes Significant Changes to Advertising and Solicitation Rules (November 6, 2019)
In November of last year, the SEC issued a release announcing "it has voted to propose amendments to modernize the rules under the Investment Advisers Act addressing investment adviser advertisements and payments to solicitors." Rule 206(4)-1, commonly referred to as the "Advertising Rule" has not been modified since its adoption in 1961 and Rule 206(4)-3, commonly referred to as the "Cash Solicitation Rule" has not been modified since its adoption in 1979. In recent years, the SEC Office of Compliance Inspections and Examinations ("OCIE") has issued RIA regulatory risk alerts related to the Advertising Rule and Cash Solicitation Rule. Despite this more recent guidance, the SEC notes that much has changed since the rules were initially adopted. As such, "the proposed amendments are intended to update these rules to reflect changes in technology, the expectations of investors seeking advisory services, and the evolution of industry practices.".
The primary regulatory filing requirement for a RIA firm is the Form ADV. The Form ADV Part 1 and Part 2 is filed via the online Investment Adviser Registration Depository ("IARD") system. However, some RIA firms that advise private funds may also be required to file a Form PF via the IARD system as well. According to the latest publicly available data from the SEC Analytics Office, as of the second quarter of 2018, there are presently over 3,000 private fund advisers advising over 30,000 private funds that currently file a Form PF. In this post, we highlight when an RIA firm managing a private fund may be required to submit a Form PF.