RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of December 20th, 2019

Posted by RIA in a Box

Dec 27, 2019 4:14:47 PM

RIA Compliance Regulatory News

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 effects of Form CRS on brokers, the top threats for investors in the new year, and the continued growth of RIAs in 2020.

Here's our top investment adviser compliance articles for the week of December 20th, 2019:    

Download our 2019 NASAA Top Compliance Deficiencies Infographic

1. Commission Brokers Will Take Another Hit When They Tell Clients They Don’t Monitor Accounts  (Author - Tracey Longo, FinancialAdvisor Magazine)

As we move into the new year, brokers are already concerned with the difficulties Form CRS (“Customer Relationship Survey”) will create when they approach new clients. Beginning in June 2020, the Securities and Commission (“SEC”) will require all brokers and advisers to disclose all aspects of their practice as a part of Regulation Best Interest (“Reg BI”). This will especially cause problems for brokers because they “will need to start showing customers in side-by-side comparisons that they do not monitor their accounts, while advisors and advisor reps do”, Tracey Longo explains.

2. Fiduciary advocate launches website to identify ‘trusted’ advisers  (Author- Mark Schoeff Jr., InvestmentNews)

Mark Schoeff Jr. writes, “A new website is using regulatory data about financial advisers to go one step further than securities regulators’ databases to help investors decide whom to hire”. The Trust Algorithm, recently released by Investor.com, digs through background information on financial advisers so you don’t have to. Schoeff explains how after the information has been gathered “the Investor.com algorithm then sorts and weighs different variables to determine whether a financial adviser or firm earns a so-called trust badge. Advisers are considered trustworthy if they meet certain requirements, such as a limited number of customer disputes, financial disclosures and regulatory events”.

         3. Secure Act, Fiduciary Rules Set Up a Doozy of a Compliance Year –  (Author - Melanie Waddell, ThinkAdvisor) 

Between Regulation Best Interest (“Reg BI”), the Setting Every Community Up for Retirement Enhancement (“Secure”) Act and many other regulation changes, 2020 is shaping up to be a big year for the wealth management industry. Melanie Waddell also discusses the two seats that are up for nomination and how the SEC plans to fill those vacancies. June 2020 is still the posted date of enforcement for Reg BI, however “it remains to be seen if the two lawsuits against Reg BI – one brought by seven states and the District of Columbia, the other by Kitces’ XY Planning Network – will derail that compliance date”, Waddell explains.

         4. Promissory notes, Ponzi schemes top investor threats for 2020, says NASAA  (Author - Investment News Staff, InvestmentNews)

The North American Securities Administrators Association (“NASAA”) has released its’ top list of threats investors need to be cautious of in 2020. Beginning at the top, NASAA named Promissory notes, Ponzi schemes, real estate investments, cryptocurrency-related investments and social media/Internet-based investment schemes to round out the top five. Christopher W. Gerold, NASAA president and chief of the New Jersey Bureau of Securities explains that the most common sign that you are walking into an investment scam “is an offer of guaranteed high returns with no risk, who noted that many of the threats facing investors involve private offerings, which are exempt from federal securities registration requirements and are not sold through public stock exchanges.”

           5. RIAs Poised for Growth in 2020, Study Reveals  (Author - Jacqueline Sergeant, FinancialAdvisor Magazine) 

E*TRADE Advisor Services conducted an independent survey that has revealed that financial advisors had a very successful year and that even more growth is expected in 2020. Jacqueline Sergeant sites the survey, stating that “more than four-fifths of advisors (82%) said they saw an increase in client numbers, and nearly nine of 10 expect to grow their assets under management. Of those, 62% anticipate a 6% to 15% increase in AUM, and one-quarter expect AUM growth exceeding 15%”. Sergeant goes on to quote Gabriel Garcia, senior vice president of E*TRADE Advisor Services. Garcia states, “the industry is entering into a significant period of transformation with unprecedented industry consolidation and the fact that more than one-third of financial advisors are expected to retire over the next 10 years. RIAs will no doubt double down on their attention to the client experience as global growth slows and service takes center stage.”

Download our Form CRS Requirements Infographic

Don't forget to check out last week's top RIA compliance news articles focusing on turning cybersecurity into a business opportunity, how firms are preparing for Form CRS, and how Chief Compliance Officers ("CCOs") contribute to growth at RIAs.

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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