RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of June 25th, 2021

Posted by RIA in a Box

Jul 2, 2021 12:32:48 PM

Top RIA compliance articles focus on the SEC's scheduled rule reviews, tips for remote exams, and possible anti-money laundering policy plans for RIAs. 

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 the growth of the investment adviser industry, cybersecurity priorities and strategies, and cryptocurrency regulation. 

Here's our top investment adviser compliance articles for the week of June 25th, 2021:

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     1. Investment Advisor Industry Grows for 9th Consecutive Year (Author – Michael Fischer, Think Advisor)

Michael Fischer provides an overview on the investment advisor industry using results from a report conducted for the year of 2020. Last year was notable, as the number of SEC registered firms, the number of clients they served, the assets managed, and the number of employees at the firms, all reached record highs. Growth was strongest for large firms, specifically those with over $100B in assets under management.

The report shows a continued shift towards RIAs charging fees based on assets under management as well as using fixed fee models while it is less common for RIAs to have commission-based compensation models.

     2. Why Data Security Should be a Priority for Advisors (Author – Robert Fernandes, Wealth Management)

This article highlights important issues related to cybersecurity for advisors including 1) common cybersecurity threats like ransomware and data breaches, 2) how to build a strong cybersecurity strategy, 3) how to assess your firm’s priorities, 4) challenges to overcome, and 5) how a cybersecurity strategy can give you a competitive edge. Robert Fernandes assumes cybersecurity policies and procedures will become more common for clients to prioritize when selecting an investment advisor. Clients trust advisors to manage their assets, and with that comes the responsibility of keeping their data secure.

   3. Prep for ransomware attacks or be ready to pay the price (Author – Nicole Casperson, InvestmentNews)

Nicole Casperson points out how advisors have become a common target for ransomware attacks due to publicly sharing information related to assets under management and because they are known to store sensitive client data. Ransomware attacks occur when cybercriminals threaten to hold data “hostage” or publish the data until a ransom is paid. Some cybercriminals will also threaten to sell a firm’s data to short sellers on the black market. Attacks like these have quadrupled in the U.S. during 2020. It is suggested advisors take responsibility for ensuring their custodians have the right cyber protections in place by doing due diligence. The article also recommends advisors establish a remote access policy to ensure employees access data in a secure manner, and properly train employees on avoiding cybersecurity risks.

    4. 7 Ways Crises Changed Our Understanding of Fiduciary (Author – Don Trone, InvestmentNews)

Don Trone highlights seven factors that play into connecting with a client and having success as a fiduciary, especially in a time of crisis. The fundamental concept of developing strong relationships with clients is at the heart of these seven points. Don also touches on the popular topic of environmental, social, and governance (“ESG”) investing, as it has become the best practice to have discussions about impact investing with clients. It is suggested that advisors will stand out to clients in a positive light by using more of a human element, by showcasing their passion and purpose for their work rather than leading discussions about funds and fees.

     5. Who Can Regulate the Crypto Market? (Author – Tracey Longo, Financial Advisor)

The topic of crypto regulation is explored in this article, as there are known gaps and difficulties in regulatory authority over certain types of crypto assets. Several industry experts express their concerns for regulatory frameworks to be developed to deliver clarity on related issues, such as reporting and fraud detection. Tracey Longo points out that there are currently several bills related to digital assets awaiting Senate action and that Congress will ultimately decide the fate of future crypto regulation.

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Don't forget to check out last week's top RIA compliance news articles that focus 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 advisers. 

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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