RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of December 24th, 2021

Posted by RIA in a Box

Dec 31, 2021 9:30:00 AM

client testimonials, archiving communications for remote work, and faulty fee calculations.

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 Securities and Exchange Commission's "SEC" statement on Form CRS, a regulatory outlook for 2022, and marketing best practices for RIAs. 


Here are our top investment adviser compliance articles for the week of December 24th, 2021:

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    1. SEC says drop jargon, clarify fees on Form CRS (Author – Mark Schoeff Jr., Investment News) 

On Friday, December 17th, the SEC released a statement addressing investment advisory firms on several key issues found in recent reviews of firms’ Form CRS disclosures. The client relationship summary disclosure should provide investors with enough information (in plain English) to compare firms and make informed decisions on where to take their business. The SEC’s findings included instances in which firm’s only vaguely described fees and billing practices, fell short of addressing conflicts of interest or incentives, and used technical financial language deemed difficult to understand for investors with limited financial knowledge.

    2. 6 Big Rules the SEC Plans to Tackle in 2022 (Author – Melanie Waddell, ThinkAdvisor)

Melanie Waddell provides an overview of six regulatory matters the SEC plans to address in 2022. This list includes amending Form PF as well as rules related to special purpose acquisition companies “SPACS” and proxy voting advice. The agency plans to evaluate the next steps for listing and trading exchange-traded products “ETPs” in the marketplace. SEC Chairman Gary Gensler also included money market reforms on the 2022 regulatory agenda. The final matter on the list addresses potential ESG disclosure requirements for investment companies and investment advisors.

    3. SEC: Firms Need More 'Plain English' in Form CRS (Author – Patrick Donachie, WealthManagement.com)

In this article, Patrick Donachie discusses the SEC’s recently released statement regarding deficiencies and recommendations related to compliance with Form CRS. The SEC’s Standards of Conduct Implementation Committee encourages firms to use concise language and refrain from using legal jargon or technical financial terms, such as ‘riskless principal’. Donachie shares how a separate review was conducted by the Plain Language Group, in which several firm’s customer relationship summaries were tested with an IA software to gauge the readability and use of standard plain language of the documents. Like the SEC’s findings, this advocate group discovered an abundance of industry jargon and complex language, making it difficult for investors to comprehend the documents.

    4. SEC highlights form CRS issues as fiduciary, language experts call for deeper change (Author – Justin L. Mack, Financial Planning)

The SEC, along with language experts, have brought attention to the need for change to improve the readability of investment advisory firms Form CRS disclosures. Industry experts have expressed concerns about common confusion within the SEC’s instructions to investment advisory firms on how to describe their fiduciary status. The recent statement released by the SEC addresses 11 issues total, including those related to the use of complex financial language and legal jargon in the Form CRS, along with deficiencies associated with conflicts of interest, investment authority, monitoring services, and disciplinary history.

    5. How To Navigate A New Marketing Strategy (Author – Kevin Darlington, Financial Advisor Magazine

In this article, Kevin Darlington guides investment advisor representatives through creating a RIA marketing strategy. Start the planning process by identifying goals and building a comprehensive plan to achieve them. These goals should be measurable metrics like gaining new clients and assets, or increasing prospect conversion rates year over year. It’s important to create a clear strategy to reach the goals set by the firm. Darlington breaks it into three components: 1) Define the target audience, 2) Map the prospect and client journey, 3) Optimize digital tactics to nurture and convert prospects into clients. The article goes into depth for these three steps, navigating the way for advisors to achieve their marketing goals with a concrete marketing strategy. Approaching marketing with a strategic mindset, advisors will get the most out of their marketing budgets and reach new levels of growth.

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Don't forget to check out last week's top RIA compliance news articles that focus on RIA in a Box joining forces with ComplySci, regulatory focus on communication record keeping, advisor compensation conflicts, and the value of a firm's compliance manual.

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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