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 technology news in the wealth management industry, calls for reevaluation of Form CRS, the Security and Exchange Commission's ("SEC") updated "qualified client" threshold, and findings on social media usage for advisors.
Here's our top investment adviser compliance articles for the week of June 18th, 2021:
1. Betterment rolls out a prepackaged tech stack for RIAs (Author – Nicole Casperson, InvestmentNews)
Nicole Casperson discusses Betterment’s recently announced partnerships with three different fintech companies to create a prepackaged “RIA Tech Suite” for both new and existing RIA firms. The Tech Suite includes an integration with RIA in a Box’s MyRIACompliance® software. The additional partnerships with RightCapital and Wealthbox provide RIA firms with tax technology, financial planning tools, and a client relationship management platform. From Betterment’s estimates, the adoption of two or more services in this tech stack could save an RIA firm up to $3,100 in their first year.
This article highlights the latest announcements and trends in technology for the wealth management industry. As listed in the advisor technology announcement section, RIA in a Box acquired leading virtual desktop provider, Itegria, to expand its IT and cybersecurity offerings. Authors, Michael Kitces and Kyle Van Pelt also highlight Zoe Financial’s announcement of a $10M Series A investment round raised to cater to the recent shift of investors searching for the best advisor for their needs online versus only finding an advisor locally.
In the past few weeks, Form CRS has made headlines on several publications in the wealth management industry. Investor advocates have continued to express their wishes for the SEC to reevaluate Form CRS for its effectiveness in protecting investors. The Institute for the Fiduciary Standard prepared an alternate version of Form CRS, which would require firms to clearly address the differences between advisor and broker dealer business models, compensation models, and conflicts of interests. Patrick Donachie also describes the investor advocate’s call for the SEC to revisit and “repair” Regulation Best Interest (“Reg BI”).
4. SEC Adjusts 'Qualified Client' Threshold for Advisor Performance Fees (Author – Melanie Waddell, Think Advisor)
Last week, the SEC approved to increase the thresholds of the assets-under-management test and the net worth test, which indicate when an advisor is allowed to charge performance fees. The criteria for the “qualified investors” are adjusted for inflation by the SEC every five years, per the Dodd-Frank Act. Melanie Waddell informs readers’ that the updated qualifications will go into place on August 16th, 2021, setting the dollar amount of the AUM test to increase from $1 million to $1.1 million, and the dollar amount of the net worth test to increase from $2.1 million to $2.2 million.
5. More Investors Are Vetting Their Financial Advisors On Social Media (Authors – Tracey Longo, Financial Advisor)
Tracey Longo shares the findings from a recent survey of investors conducted by Hartford Funds. Results show that almost half of investors believe social media impacts their selection of a financial professional and 20% of investors make hiring decisions based off the advisor’s social media pages. The article suggests that firms should have multiple digital presences to appeal to the different generations of investors. Key findings from the survey also show that more than half of investors seek advice from advisors over digital media.
Don't forget to check out last week's top RIA compliance news articles that focus on the Security and Exchange Commission's ("SEC") Ad Rule, a new program on elder financial abuse for financial professionals, new legislation regarding Environmental, Social, and Governance ("ESG") disclosures, and the upcoming rule-making on the Department of Labor's ("DOL") Fiduciary Rule.