RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 18, 2019

Posted by RIA in a Box

Jan 25, 2019 5:17:48 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 potential compliance issues when utilizing TAMPs, the impact on the Securities and Exchange Commission ("SEC") through the continued government shutdown, cybersecurity, and Nevada's proposed fiduciary rule. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of January 18, 2019:

A Guide to Transitioing from State to SEC Registration

1. TAMP Users: Watch Out for This Fiduciary Land Mine (Author- Scott MacKillop, WealthManagement)

Scott MacKillop writes, "The modern-day version of the free toaster creates a big, fat fiduciary problem for advisors. Advisors are, in effect, using their clients’ assets to buy services for themselves. If, in the process, their clients are paying more for their TAMP services than they might pay elsewhere for similar services, the advisor may have breached his or her fiduciary duty to their clients." He also notes, "Since the SEC hasn’t turned this stone over yet, we don’t know exactly how it will deal with it once it does. But if it views this issue using the same frame of reference it has used for years in the soft-dollar area, it represents a fiduciary land mine for unwary TAMP users." This is an emerging RIA compliance area which draws attention to best execution and other soft dollar-like issues.

2. Republican Congress Ranks Cybersecurity, FinTech High on Priority List (Author - Diana Britton, WealthManagement)

Congressman Patrick McHenry of the Republican National Convention is looking to bring attention to a few critical areas. According to Dana Britton, “[McHenry] is calling on the House Financial Services Committee to hold hearings in the next couple months on issues he believes are critical to regulating the financial services industry, including cybersecurity and fintech.” Among these issues are cybersecurity in the financial sector, regulation of financial technology, Brexit, Export-Import Bank, and more.

  1. Nevada's 'Expansive' Fiduciary Plan Shocks BDs, RIAs (Author - Melanie Waddell, ThinkAdvisor)

Last Friday, the Nevada Securities Division released a proposal for fiduciary regulations shocking the broker-dealer and registered investment advisor world.  In this article, ERISA attorneys Fred Reish and Brad Campbell of Drinker Biddle & Reath walk through the major differences between Nevada’s plan and Reg BI. According to Melanie Waddell, Fred Reish says, “…the ‘biggest difference’ between the Nevada proposal and the Securities and Exchange Commission’s proposed Regulation Best Interest is that Nevada’s proposal includes a ‘private right of action.’”

  1. Advisers should be worried about the shutdown - and yes, you should step in (Author- Editorial, InvestmentNews)

The editorial staff of InvestmentNews writes, "So, what's an adviser to do? Call your representative and senators (U.S. Capitol switchboard: 202-224-3121) and message or call the president (whitehouse.gov/contact or 202-456-1414). Really. They work for us, and they seem to be forgetting that. Use your clout as a financial adviser to drive home the importance of financial stability in the economy and financial security for individual actors within it." With breaking news today that a temporary agreement may have been reached to end the shutdown this will be an issue to continue to monitor in the coming weeks.

  1. Kitces, Moore Turn To Advisors To Crowdfund Payment Platform (Author- Christopher Robbins, Financial Advisor Magazine)

Christopher Robbins shares Michael Kitces and Alan Moore’s story of how they used crowdfunding as a source of raising capital for their AdvicePay platform. After receiving positive feedback on the technology, Moore and Kitces turned to investment advisors to crowdfund the platform raising around 2 million dollars in two months. AdvicePay launched last year and provides an easy way for advisors to charge planning fees to help address many RIA compliance issues related to fixed or flat fee billing.

Download Our Free RIA Cybersecurity Compliance Checklist

Don't forget to check out last week's top RIA compliance news articles on how the RIA industry continues to fragment with the total of firms growing each year, the SEC's focus on cybersecurity, and the SEC's Reg BI proposal. Be sure to check back next Friday for next week’s top articles! 

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..

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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