RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 11, 2019

Posted by RIA in a Box

Jan 18, 2019 3:32:38 PM

sec 2019 RIA audit priorities

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 Securities and Exchange Commission's ("SEC") crackdown on cybersecurity, how the RIA industry is fragmenting, and the SEC's Regulation Best Interest ("Reg BI") proposal. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of January 11, 2019:

Download our 2018-2019 RIA Firm Registration Renewal Infographic

1. Are smaller RIA firms facing extinction? Maybe not (Author- GJ KingFinancialPlanning )

It may seem as if the RIA industry is consolidating, but industry data paints a different picture. According to GJ King, President of RIA in a Box, "Over the last decade, the total number of state-registered RIA firms has not declined in a single year (specifically, firms with less than $100 million in regulatory assets under management register with the relevant states). At the end of 2008, there were approximately 13,800 firms. That number soared to more than 17,500 firms by early 2018." He also notes that while, "Skeptics may argue that the long-running bull market masked the challenges ahead, as inflated industry profit margins decrease dramatically during the next inevitable market downturn. Yet during the 2008-2011 market downturn, the number of RIA firms grew, surprisingly, by nearly 1,000."

2. Crackdown showdown: Serious cybersecurity enforcement is coming in 2019, but are advisers ready? - Ryan W. Neal, InvestmentNews)

Ryan Neal writes the SEC is cracking down on cybersecurity. This means shorter grace periods and faster reaction times when a breach occurs. According to Neal, the Voya Financial Advisors settlement is a prominent example, "No alarm rings louder than the SEC's Sept. 26, 2018, announcement that Voya Financial Advisors would pay $1 million to settle charges relating to a 2016 scam that compromised the personal information of thousands of customers. It was the first time the SEC enforced its 'identity theft red flags rule,' which has been on the books since 2013." Make sure you are prepared and review your firm's cybersecurity practices as cybersecurity once again ranks as of the SEC's top 2019 RIA examination priorities.

  1. How Smart Are You About the SEC's Regulation Best Interest? (Author - John Kador, WealthManagement)

Are you prepared for the SEC's Reg BI proposal to be implemented? John Kador of WealthManagement.com published a quick quiz containing twelve questions to "test your understanding of the regulatory playing field and determine how prepared you are for the coming regulations." Allow yourself one point for each correct answer. Score nine or more points and "count yourself suitably prepared for Regulation Best Interest." Take the quiz now 

  1. 'Visionary' Bogle Gave SEC a Warning About Reg BI (Author- Melanie Waddell, ThinkAdvisor)

Legendary Vanguard founder and the creator of the first index mutual fund in 1975, John Bogle, passed away Wednesday at his home in Pennsylvania. In addition to leaving his influential stamp on the investment advice industry, Bogle left the SEC with advice to "mull as it marches ahead with its advice-standards package and the much-debated Regulation Best Interest." According to Melanie Waddell's recent article, "Bogle told Clayton that he applauded the commission's 'attempt to ensure that the best interests of investors are not superseded by the interests of service marketers,' calling Reg BI 'the essence of fiduciary duty.' " In addition, Bogle warned SEC Chairman, Jay Clayton, 'Ideas are a dime a dozen. Implementation is everything.' To read more of Bogle's thoughts on Reg BI, click here

  1. Michael Kitces: The latest in financial adviser fintech - January 2019 (Author- Michael Kitces, InvestmentNews)

Michael Kitces released his January 2019 issue of the "Latest News in Financial Advisor #FinTech" where he "looks at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management." In this month's addition, highlights include, Blackrock partnering with Microsoft , the roll out of TD Ameritrade's new account-opening API, and LPL's acquisition of AdvisoryWorld. He also discusses RIA in Box's release of the new investment adviser "Audit Prep" tool.

Download Our Free RIA Cybersecurity Compliance Checklist

Don't forget to check out last week's top RIA compliance news articles on the impact of the government shutdown on the SEC new advisor registration process, how the SEC will be monitoring electronic communication, and how the SEC shutdown may open the door for fraud. Be sure to check back next Friday for next week’s top articles! 


Topics: RIA Compliance

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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