RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of April 16th, 2021

Posted by RIA in a Box

Apr 23, 2021 2:43:50 PM

Top RIA compliance articles focus on the SEC's scheduled rule reviews, tips for remote exams, and possible anti-money laundering policy plans for RIAs. 

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 the Department of Labor’s “DOL” fiduciary rule guidance, a push for clarification on the Security and Exchange Commission’s (“SEC”) Regulation Best Interest ("Reg BI"), and cybersecurity attacks and prevention tips.

Here's our top investment adviser compliance articles for the week of April 16th, 2021:

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      1. Consumer Group Presses SEC's Gensler to Define 'Best Interest' (Author – Melanie Waddell, Think Advisor)

This article discusses how the Consumer Federation of America has expressed its plea to reform the regulation of broker dealers and investment advisers to newly confirmed SEC Chairman Gary Gensler. Consumer Advocate, Barbara Roper points out the need for reform comes from unclear standards set by Regulation Best Interest and she insists a principles-based definition is essential to make an impact to protect vulnerable investors. The new fiduciary guidance set by the Department of Labor also relies on the definition of Reg BI as to how financial professionals should act in the customer’s best interest.

     2. DOL arms investors with rollover questions that could catch some advisers off guard (Author – Emile Hallez, Investment News)

Questions around implementation and representation arise following the recent release of additional guidance to the DOL’s fiduciary rule entitled, Improving Investment Advice for Workers & Retirees. Although the enforcement effective date for the new rule is not until December 20th, advisers are likely going to be faced with questions from clients and prospective clients regarding whether they are complying with the DOL’s exemption and if they have any conflicts of interest.

This article brings attention to the issue that RIA firms are not prepared to “flip the switch” to tell clients that they are fully compliant if they plan to rely on the rule but have not updated their policies and procedures. It is stated that most firms’ intentionally wait to update their policies and procedures until the enforcement date. The article suggests that firms will have to carefully align the timing of how they represent themselves to clients with the implementation of new policies and procedures following the exemption.

      3. Five Tips for Detecting Social Engineering Security Attacks (Author – Sam Levy, WealthManagement.com)

Sam Levy shares insight on a specific security breach that most people do not think about known as “social engineering”. This cybersecurity attack is described as instances when someone is tricked into divulging information or enabling access to data networks. Levy highlights that people often divulge passwords and usernames when requested by someone they think is a trusted and legitimate representative. He lists tips to protect yourself and your firm which include: 1) verify the source, 2) break the sense of urgency by delaying action, 3) ask for ID, 4) slow down and be wary, and 5) think about your digital footprint when sharing personal information.

     4. New Bill Would Require RIAs To Submit Diversity Data (Author – Tracey Longo, Financial Advisor)

Tracey Longo sheds a light on the industry support for the “Diversity and Inclusion Data Accountability and Transparency Act” which will soon be reviewed by the House Financial Services Committee. This act will require RIA firms with over 100 employees to report their diversity and inclusion data to the government. Investment Adviser Association President and CEO Karen Barr stated her commitment to work with its members and policymakers “to seek to promote diversity, equity, and inclusion as a value for our industry and to providing education, information, and resources to help foster significant progress.”

      5. In-Person Events Will Have To Wait As More Advisor Conferences Go Virtual (Author - FinancialAdvisor Staff)

Financial organizations such as Schwab and BNY Mellon are listed as two, among many, companies that will be hosting virtual conferences this year. The Financial Advisor staff informs readers’ that the return of large-scale in-person conferences is at least a year away - if they do come back at all. Financial Advisor, The Money Management Institute and The Execution Project are collectively hosting an all-virtual event called Next Chapter dedicated to the changing nature of retirement on June 16-17. The staff lists a few smaller-scale conferences that are currently slated for in-person attendance such as Orion, Riskalyze, and Inside Information.

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Don't forget to check out last week's top RIA compliance news articles that focus on the DOL's guidance to the “Improving Investment Advice for Workers & Retirees” exemption, the ESG alerts raised by the SEC and strategies for marketing post-pandemic.

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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