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Top RIA Compliance News Articles for the Week of August 13th, 2021

Posted by RIA in a Box

Aug 20, 2021 2:40:16 PM

RIA Archiving, SEC regulation

Each week we are 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 online communications monitoring, rising demand for cybersecurity insurance, an advisor's role in helping clients affected by a databreach, and the findings from a study on investor comprehension of advisor fees.

Here's our top investment adviser compliance articles for the week of August 13th, 2021:

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     1. The GME Short Squeeze: A Case For Adjusting Online Communications Monitoring? (Author – Steve Brown, Wealth Management)

Regulatory issues around social media arise following the events of the GameStop and AMC Entertainment “frenzy”. There’s no doubt that social media has the power to influence markets. Steve Brown urges compliance officers to be aware of employee social media activity that could violate rules of the Financial Industry Regulatory Authority. RIA firms can refer to the SEC’s marketing rule to understand how investment advisors can use social media and remain compliant. The article points that firms may be overwhelmed with manually monitoring all social media activity of their employees and recommends implementing automated surveillance processes. Firms are also encouraged to conduct regular employee compliance training around emerging issues such as social media usage.

    2. Cyber insurance for 401(k)s rises in cost, demand (Author – Emile Hallez, InvestmentNews)

Emile Hallez discusses how the increase of cyber-attacks is impacting the cyber insurance market. The Department of Labor “DOL” is focused on a cybersecurity audit initiative for retirement plan cybersecurity practices. One industry expert mentions that the uptick of news covering ransomware attacks has generated fear that plan sponsors could be next. Hallez points out that due to increased demand and guidelines from the DOL, cybersecurity insurance rates are skyrocketing, and many insurance firms are now expanding their products offerings to include cybersecurity protection.

    3. Breakaway Advisors Explain Why Grass Greener As Independents (Author – Jacqueline Sergeant, FinancialAdvisor)

This article discusses insights on the transition to independent RIA models from breakaway advisors who participated in a recent survey conducted by Dynasty Financial Partners. There appears to be a shared sentiment between the advisors who responded to the survey, concluding that the transition was well worth it, noting that net worth increased, and client relationships have improved. Advisors also revealed an increase in flexibility to spend time working on clients unique and individual needs. Jacqueline Sergeant mentions that while these advisors are pleased with the result of the transition into independence, they also shared challenges they faced starting a new business.

     4. T-Mobile data breach highlights cybersecurity issues for clients (Author – Nicole Casperson, Investment News)

This week, T-Mobile announced it has experienced a data breach because of a sophisticated cyberattack, affecting millions of individuals personal data. In this article, advisors are encouraged to reach out to their clients and help in case they were a part of the data breach. Advisors can guide their clients to take the following steps: 1) notify the FTC of identity theft, 2) freeze their credit with the credit bureaus, and 3) notify the IRS of a SSN hack, 4) notify their employer in case of a false unemployment claim.

     5. Investor Confusion On Fees Equals Opportunity For Advisors (Author – Brie Williams, Think Advisor)

Brie Williams discusses the findings on fee comprehension by investors from the State Street Global Advisors’ Low-Cost Investing Survey. The survey shows that comprehension of investment product fees in general, is low. Investors need to do their due diligence to determine the “total cost of ownership.” The article also points out that while prioritizing expenses is important, investors should also pay close attention to risk, volatility, portfolio diversification and tax efficiency. Advisors are encouraged to take the opportunity to explain the total price as well as the other factors that affect returns properly and clearly.

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Don't forget to check out last week's top RIA compliance news articles that focus on the announcement of Maryland securities chief elected to serve as President of the North American Securities Administrators Association (“NASAA”), the Department of Labor's ("DOL") fiduciary rule, environmental, social, and governance (“ESG”) disclosures, and cryptocurrency regulation.  

Topics: RIA Operations, RIA Compliance, RIA Technology

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does 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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