RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 31st, 2020

Posted by RIA in a Box

Feb 7, 2020 12:41:19 PM

Top_Compliance_Articles_of_the_week-17Each 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 how to avoid Customer Relationship Summary (commonly referred to as the Form CRS) pitfalls, steps to take when creating your succession planning, and industry trends to keep an eye on.

Here's our top investment adviser compliance articles for the week of January 31st, 2020:

Learn More About Form CRS

1. Want to Avoid Form CRS Regulatory Pitfalls? Think Like a Retail Investor  (Author - Tracy Longo, Financial Advisor Magazine)

With the Form CRS being a main 2020 focus for the Securities and Exchange Commission (“SEC”), advisers need to be cautious when creating their client relationship summary. Kelli A. Haugh, managing director for Foreside, explains, “The purpose of Form CRS is to reduce confusion for retail investors regarding advisory and brokerage services and to help them decide whether to establish an investment advisory relationship, engage a particular firm or financial professional, or terminate or switch a relationship or specific service. Advisers should evaluate conflicts as perceived from a retail investor’s perspective, even if the firm believes the conflicts are mitigated.”

2. Opposition to SEC Proxy Proposals Grows (Author- Bernice Napach, ThinkAdvisor)

The SEC is moving closer to finalizing their two proposals concerning proxy voting rules, much to the opposition of than 18,000 individuals who signed a petition opposing this policy change. Green America, Americans for Financial Reform, and As You Sow are at the forefront of this opposition, standing for economic freedom of the consumer and investor and the creation of an environmentally sustainable economy. “There is no democracy for shareholders in America unless they have a right to engage in meaningful shareholder advocacy and to be heard. Many of the major advances of recent corporate history – going back to the rejection of racist apartheid South Africa and as recently as action on climate change – owe their success to shareholder advocacy”, stated Green America Executive Co-Director Fran Teplitz.

         3. 3 Must-Ask Questions for Succession Planning (Author - Jarrod Upton, ThinkAdvisor)

In this article, Jarrod Upton dives more into succession planning and what advisers should be focusing on when creating their own plan. There are three questions to ask yourself to jumpstart the process and create the framework. Advisers also have two basic types of succession plans to follow – either an internal or external transition. There are several factors that come into play for both paths, and all depends on what the adviser wants in the long run. Upton adds, “Don’t overlook that succession planning done right is necessary for your clients as much as for yourself. You want to create a transition that will best serve your clients and the team members who will remain even after you leave.”

         4. 5 Industry trends that could continue in the new decade (Author- Jamie Hopkins, InvestmentNews)

Based on trends in 2019, Jamie Hopkins predicts trends that are likely to continue into 2020. Those trends include transparency, fees, consolidation, technology acquisitions, and “fiduciary rumblings.” Hopkins makes references to 2019 events including speaking out against inappropriate comments, changes in Schwab commissions, and mergers and acquisitions. Hopkins emphasizes fiduciary standards as an important trend in 2020 stating that, “Many of the state rules and laws will be challenged; the SEC rule is being challenged in court. Fiduciary rules appear to be front and center in the industry.”

           5. 3 Areas Regulators Are Targeting Now, According to Lawyers (Author - Melanie Waddell, ThinkAdvisor)

In this article, Melanie Waddell highlights three areas that regulators will be focused on in 2020 based on discussions with industry attorneys including James Lundy, Sandra Dawn Grannum, and Brad Campbell, partners at Fagre Drinker Biddle & Reath. These areas include Regulation Best Interest (“Reg BI”) enforcement, a sweep of 403(b) sales to teachers, and the Setting Every Community Up for Retirement Enhancement Act of 2019 ( “The Secure Act”). According to Sandra Dawn, “As for Reg BI, while the Financial Industry Regulatory Authority has stated that second-half 2020 BD compliance exams will not be ‘gotcha moments,’ Sandra Dawn Grannum, said during the webcast that the regulator will expect ‘good-faith attempts’ to comply with all four parts — care, disclosures, conflicts of interest and compliance.”

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Don't forget to check out last week's top RIA compliance news articles focusing on cybersecurity, Securities and Exchange Commission's ("SEC") Regulation Best Interest ("RegBI"), and proposed proxy rule changes.

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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