RIA Compliance and Practice Management Blog

Top RIA compliance news articles for the week of Mar. 3, 2023

Posted by RIA in a Box

Mar 10, 2023 10:14:39 AM

RIA outsourcing ruleEach Friday, 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 growing number of RIAs the Securities and Exchange Commission (SEC) must examine, the new deadline financial advisers must meet to comply with the Department of Labor’s (DOL) fiduciary rule, the SEC’s new cybersecurity guidelines for investment advisers and broker-dealers, the growing interest among financial advisers to start their own RIA firms and a request by industry groups for an extension on the comment period for the proposed expansion of the Custody Rule.

Here are our top investment adviser compliance articles for the week of Mar. 3, 2023:

Download our top 10 best practices for RIA firms in 2023 infographic here


RIAs Keep Growing Faster Than SEC Can Examine Them (Author – Melanie Waddell, ThinkAdvisor)

The number of RIAs has grown at a faster pace than that of the resources available within the SEC to examine them, according to a report by the Investment Adviser Association and National Regulatory Services. The report revealed that the number of RIAs has increased by 25% since 2016, while the number of SEC examiners has only increased by 4%, potentially leading to more firms operating without proper oversight. The report also highlighted that RIAs are increasingly using technology and outsourcing compliance functions to help manage their businesses.


Are You Ready for the DOL’s Next Fiduciary Deadline? (Author – Thomas D. Giachetti, ThinkAdvisor)

The DOL has set a new deadline of Apr. 1, 2023, for financial advisers to comply with its fiduciary rule. The rule requires advisers to act in the best interest of their clients when offering retirement investment advice. Advisers must ensure that their compensation structures do not create conflicts of interest which could harm clients, and they must clearly disclose any conflicts of interest that exist. The article recommends that advisers should review their compensation arrangements and disclosures to ensure they comply with the rule. The article also suggests that advisers communicate with their clients to explain any changes they have made to their business practices in response to the new rule.


Bolstering Cybersecurity: The SEC’s Focus on Cyber Reporting (Author – Javier Gutierrez, JD Supra)

The SEC has issued new cybersecurity guidelines for investment advisers and broker-dealers to enhance their cybersecurity programs. The guidelines provide specific examples of cybersecurity incidents which investment advisers and broker-dealers should address and outlines best practices for managing and mitigating cybersecurity risks. The guidelines also suggest firms conduct periodic assessments of their cybersecurity programs and report any material incidents to the SEC. The article advises firms to review and update their cybersecurity programs in light of the new guidelines and to ensure they are in compliance with the SEC's expectations. The article also suggests firms train their employees to recognize and respond to cybersecurity threats and to have a plan in place in case of a cybersecurity incident.


The undiminished lure of RIA firms (Author – Investment News)

According to a recent survey, the appeal of RIA firms remains strong among financial advisers. The survey found that nearly half of all advisers would prefer to work for an RIA firm, while only 17% would prefer to work for a wirehouse. The survey also found that many advisers are considering starting their own RIA firms, with 30% stating that they are likely to do so in the next five years. The article suggests that the appeal of RIA firms may be due to their ability to offer greater independence and flexibility to advisers, as well as their focus on serving clients' best interests. The article also notes that RIA firms have seen significant growth in recent years, with assets under management increasing by 13% in 2022, highlighting the continued demand for their services.


Industry Groups Press SEC to Extend Custody Rule Comment Period AuthorMelanie Waddell, ThinkAdvisor)

12 industry groups have requested the SEC extend the comment period on the new proposed expansion of the Custody Rule. In their letter, the groups stated the expansion plan is, “broad based, complex, and technical, proposing changes that will drastically and permanently alter the custody business model and the prevailing market for custody services.”

Currently the comment period is open for 60 days.


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Don't forget to check out last week's top RIA compliance news articles recapping on financial advisers attitudes toward wealthtech, the SEC custody rule and the SEC’s 2023 examination plans.

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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