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 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.
Here are our top investment adviser compliance articles for the week of December 3rd, 2021:
1. ComplySci Acquires Compliance Software Firm RIA In A Box (Author – Karen Demasters, Financial Advisor)
Karen Demasters covers the recently announced acquisition of RIA in a Box by regulatory technology provider, Complysci. By joining forces, the organization will provide enhanced services to a broader audience of financial services organizations. The firm will now provide governance, risk and compliance services, as well as consulting, technology, managed services, analytics and outsourcing solutions. The combined organization now serves more than 7,000 customers with over 300 employees on board.
This article highlights the importance of record keeping and supervision of firm communications. Firms are cautioned to ensure their policies and procedures outline a strong system to maintain digital communications, as regulators will focus on this area during examinations. It is also recommended for firms to address the evolving compliance issues related to new technology and apps, increased use of personal devices, and new communications channels as they relate to communication with clients. An SEC spokesperson expressed that firms' obligations in communications and record keeping are essential to market integrity and enforcement.
3. Advisor Compensation Conflicts Are Likely SEC, DOL Target In 2022, Attorney Says (Author – Tracey Longo, Financial Advisor)
Looking forward, Tracey Longo tells readers that regulators will focus heavily on advisor compensation conflicts during future examinations. With respect to the Department of Labor's (DOL) Fiduciary Rule, many firms will need to mitigate any compensation conflicts for retirement advice to qualify for the fiduciary exemption. The DOL recommends firms "should carefully design differences in compensation between categories to avoid incentives that place the interest of the firm or investment professional ahead of the financial interests of the customer."
Regulators will also focus on how firms' policies and procedures are structured to ensure proper supervision and monitoring of investment advice.
4. Compliance Manual as RIA Operations Manual (Author – Matt Sonnen, Wealth Management)
Matt Sonnen shares how the key to operational success lies within the compliance manual. Firms should assess how their compliance manuals align with the actual day-to-day business practices and back-office functions. Sonnen explains how routine regulatory audits would uncover any crucial business information missing in a firm's manual, as well as expose any inconsistencies between the manual and actual operational workflows. Compliance should be viewed as enterprise risk management, and not just rules and regulations. He also suggests firms should consider customizing their manuals to their firm's unique business practices, and frequently make updates as business operations change.
5.Regtech RIA in a Box acquired by ComplySci (Author – Sean Allocca, InvestmentNews)
The recent acquisition of RIA in a Box by ComplySci hits the financial industry headlines again. RIA in a Box will still operate as its own brand with the continued leadership of Will Bressman as CEO. Bressman expressed the firm's excitement to join forces and further enhance the services and solutions offered to thousands of clients served by the combined organizations. The article points out that compliance has become an increasingly critical to firms with the uptick in remote work and the adoption of new technology by advisers.
Don't forget to check out last week's top RIA compliance news articles that focus on client testimonials, archiving communications amid remote work, and warnings on faulty fee calculations.