RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of June 7, 2019

Posted by RIA in a Box

Jun 14, 2019 4:46:14 PM

SEC Form CRS passing

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 focuses on reactions to the Securities and Exchange Commission's ("SEC")Regulation Best Interest ("Reg BI") passing, what the meaning of fiduciary will be moving forward, and the latest in Financial Technology ("FinTech"). Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of June 7th, 2019:

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1. The Good, Bad and Ugly of SEC’s Reg BI and Advice-Standards Package  (Author- Melanie Waddell, ThinkAdvisor)

There are many factors to be cautious of when becoming compliant with the SEC’s recently passed Reg BI rule. However, it is important that RIA firms read between the lines and focus on Form CRS ("customer relationship summary") and what it means for their firm moving forward. GJ King, President of RIA in a Box, is calling Form CRS “the first significant regulatory filing requirement to impact RIA firms in a decade.” King wants firms to understand that this form is “a new disclosure document, which will become the firm’s primary facing prospect and client disclosure document.”

2. Does the SEC’s new interpretation of the investment adviser standard diminish it? Depends who you ask (Author- Mark Schoeff Jr., InvestmentNews)

Mark Schoeff Jr. states, “one of the most controversial parts of the advice reform package the SEC approved last week is its interpretation of the standard of conduct for investment advisers.” Many have come forward to criticize the new rules within the package, saying that the SEC has diminished the fiduciary duty. Rick Fleming, SEC investor advocate, stated, “in my view, the new fiduciary interpretative release weakens the existing fiduciary standard by suggesting that liability for nearly all conflicts can be avoided through disclosure.” The overall result seems to create a blurred line between advisor and broker dealer.  

3. Reg BI is a gift to ‘wolves of Wall Street,’ says tech CEO (Author - Sean Allocca, FinancialPlanning)

With the approval of Reg BI, many are concerned what the future of wealth management technology holds. Jon Stein, CEO of Betterment, stated “Unfortunately, this misleadingly titled rule may best serve the marketing interests of large financial corporations to the detriment of individual investors. It is a gift of sheep’s clothing to the wolves of Wall Street.” With the Reg BI outcome becoming increasingly divisive, there is a rising concern that more states will want to create their own legislation, following in the footsteps of Nevada and New Jersey. Anders Jones, CEO of Facet Wealth, spoke to this concern, “The challenge for the RIA industry is to make fiduciary quality advice affordable and accessible to the general investing public. This must be done, because of the potential for states to enact their own legislation, which will only create further inequality and confusion among consumers.”

4.  Fiduciary Debate Might Shift to States (Author - Dan Jamieson, Financial Advisor Magazine)

Even though Regulation Best Interest was passed and settled, officials at TD Ameritrade are keeping an eye on the states to see if there is a move to create state-centric legislation. Tom Nally, president of TD Ameritrade Institutional, is concerned Reg BI won’t clear up confusion among investors, but it will all depend on how Reg BI is implemented.

5.  Michael Kitces: The latest in financial adviser fintech – June 2019   (Author - Michael Kitces, InvestmentNews)

Michael Kitces rounds up the top news stories and information in FinTech that you need to know from the last month. To start off, Vanguard has started working on a technology platform for advisors that seems to be a form of robo-advisor-for-advisors offering, which could likely be an entire RIA custodial platform. Goldman Sachs has acquired United Capital to move into the “mass millionaire” wealth management marketplace. Morningstar has launched its own Model Marketplace but has elected to follow a “fee-only” approach when charging for their software. Kitces offers insight and industry knowledge about these decisions and several others in the rest of his article.

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Don't forget to check out last week's top RIA compliance news articles focusing on the SEC passing their Reg BI proposal, Form CRS, and RIA cybersecurity enforcement.  Be sure to check back next Friday for next week’s top articles! 


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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