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 business continuity plans and pandemic preparedness, The North American Securities Administrators Association (“NASAA”) moving forward with continuing education requirements, and key steps for working from home.
Here's our top investment adviser compliance articles for the week of April 10th, 2020:
1. As pandemic triggers continuity plans, what RIAs and BDs should ask themselves (Author- Kate Hanniford and Tim Foley, Financial Planning)
Kate Hanniford and Tim Foley discuss the ongoing response to COVID-19 in the wealth management industry and how firm’s business continuity plans (“BCP”) are being put to the test. Many in the industry have been searching for guidance during this unprecedented time, turning to The Financial Industry Regulatory Authority (“FINRA”) for resources and next steps. FINRA has provided many resources on their website and urge RIAs to “evaluate their BCP procedures in response to current events” and how they could improve their pandemic preparedness moving forward. Hanniford also suggests, “given the reliance on information technology and security to support remote work arrangements, wealth management firms may also consider reviewing their BCPs in tandem with their cybersecurity incident response plans.”
2. NASAA Moves Forward with CE Requirement for Investment Advisor Reps (Author- Patrick Donachie, Wealth Management)
NASAA has moved into the last stage of finalizing its continuing education (“CE”) rule for investment advisor representatives (“IARs”). Once finalized, the rule will be distributed to state legislators and regulators, but it remains to be seen if the requirements will look the same across all states. “I think the key will be whether states adopt the model rule on a uniform basis. If they don’t adopt with minimal changes, it will be a difficult standard for advisors, particularly federally registered advisors, to comply with because they’ll have a administer a patchwork of different state requirements, or at least have to compare and contrast different state requirements”, stated Jennifer Klass, the co-chair of the Financial Regulation and Enforcement Practice in North American at the law firm Baker McKenzie.
3. New Addepar Pricing Assurance Program for RIAs: Portfolio Products (Author - Jeff Berman, ThinkAdvisor)
Jeff Berman touches on many recent technology and software developments that have been launched by some of the top providers in the wealth management industry. Topping the list is The Addepar Assurance program and RIA in a Box’s new Form CRS (“Customer Relationship Summary”) tool. The Addepar Assurance program “provides a credit for new clients to offset their cost of Addepar until the negative impact of market conditions on their business subsidies”, the product release explains. RIA in a Box released its Form CRS creation tool to help clients complete the document before the June 30 deadline. “The proprietary Form CRS tool is available for no additional charge to all subscribers of the firm’s MyRIACompliance platform”, the product release stated.
4. Breakaway Advisors Drawn To RIA Channel For Bigger Payouts (Author- Jeff Schlegel, Financial Advisor Magazine)
Cerulli Associates, a research and consulting firm, has released their latest report “The Cerulli Edge – U.S. Asset and Wealth Management Edition”, that analyzes the data around independent broker-dealers who have indicated wanting to make the transition to a registered investment advisor (“RIA”). If they were to leave their firm, Marina Shtyrkov, a Cerulli senior analyst, explains further, “The desire for independence is particularly pronounced among national and regional B/Ds, many of which may display a stronger entrepreneurial drive compared to their wirehouse peers. Perhaps given the advisor-centric cultures at some of the largest national and regional B/Ds, these advisors feel more comfortable fully embracing independence.”
5. Key Tech Steps for RIAs Working From Home (Author - Jeff Berman, ThinkAdvisor)
With working from home being our new reality until further notice, there are five key guidelines for registered investment advisers (“RIA”) to follow, according to Wes Stillman, CEO of RightSize Solutions. With cybersecurity being at the top of the list, Stillman explains, “We are seeing a huge increase in cyber attacks that are trying to take advantage of many some vulnerabilities presented by our employees trying to work from home. Phishing attacks still remain today as the No. 1 attack vector out there. Using multi-factor authentication is “your first line of defense and will help tremendously”. Jeff Groves, president of ComplianceWorks, also touches on the importance of strong communication, saying, “It is more important than ever for advisors to make sure they are communication often with their clients and other firms”.
Don't forget to check out last week's top RIA compliance news articles focusing on the SEC's Reg BI including From CRS, compliance concerns related to COVID-19, and cybersecurity.