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 on RIA in a Box's new cybersecurity platform, the need to invest in compliance, and third-party manager diligence. Check back each week for the latest list of top stories.
Here's our top investment adviser compliance articles for the week of May 10th, 2019:
1. A Firm Known for Compliance Tech Expands Into Cybersecurity (Author- Samuel Steinberger, Wealth Management)
Samuel Steinberger discusses the release of the new RIA in a Box cybersecurity platform. RIA in a Box President, GJ King, highlights, "You and your firm’s staff are either your greatest cybersecurity defense—or weakness. The human side is far too often overlooked."The new proprietary platform offers ongoing cybersecurity training along with email phishing attack simulation, technology and risk inventory, and the ability to create a customized information security policy built upon the National Institute of Standards and Technology (“NIST”) cybersecurity framework. Industry experts weigh in on the offering and its added value to RIA firms. The platform is available as a standalone subscription or bundled with a traditional MyRIACompliance compliance subscription.
2. How much is enough compliance? SEC grumbles about firms’ efforts to cover risks (Author- Mark Schoeff Jr., InvestmentNews)
As written by Mark Shoeff Jr., “In a recent speech, Pete Driscoll, director of the Securities and Exchange Commission ("SEC") Office of Compliance Inspections and Examinations ("OCIE"), said the agency is noticing that compliance budgets are being cut or are not commensurate with firms’ risk profiles.” Industry experts weigh in on the matter emphasizing the importance of establishing and committing to a culture of compliance at your firm in addition to simply purchasing technology or hiring. In the article, RIA in a Box President, GJ King, also speaks to the importance of properly empowering the firm's Chief Compliance Officer. Furthermore, experts offer suggestions on how much of a firm’s resources should be allocated towards compliance efforts, depending on the firm’s size and business model.
3. Helping Clients Stay Out of Cyber Trouble (Author - Jeff Schlegel, Financial Advisor Magazine)
During a session at the National Association of Personal Financial Advisors’ ("NAPFA") Spring National Conference, David Jacobs, computer security expert, spoke about the major frauds and scams and ways in which financial advisors can help their clients to avoid scams. Jacobs walks through common scams, tips on how to spot them, and how to avoid them. According to Jeff Schlegel, “Financial advisors, he noted, can help steer their clients away from these nefarious schemes by making them aware of potential scams and/or being a sounding board if a client has questions about the legitimacy of a particular phone or email notice from a third party.”
4. Third-Party Managers: How to Do Your Operational Due Diligence (Author - Richard L. Chen, ThinkAdvisor)
While firms may understand the risks associated with third-parties, operational due diligence is often neglected. According to Richard L. Chen, “The SEC considers operational due diligence of such managers as a part of an advisor’s fiduciary duty owed to its clients. The failure to conduct proper operational due diligence could lead to regulatory or civil liability should a client’s assets or information be lost, stolen, or otherwise compromised.” Chen walks through what operational due-diligence is, tools, and key functional areas including: personnel, processes, and privacy.
5. N.J. Governor Vetoes Bill Saying Insurance Agents are Not Fiduciaries (Author - Diana Britton, Wealth Management)
New Jersey Governor Phil Murphy vetoed a state bill that eliminated a fiduciary standard for insurance agents. According to Diana Brittion, “New Jersey Gov. Phil Murphy has been an outspoken proponent of the state’s proposed fiduciary rule, which he called ‘some of the strongest investor protections in the nation.’” Phil Murphy also offers recommendations on the bill. Furthermore, the state’ Bureau of Securities recently proposed a rule that would establish a uniform fiduciary rule for all financial advisors.
Don't forget to check out last week's top RIA compliance news articles focusing on cybersecurity, progress of the SEC's Reg BI proposal, and digital marketing strategies for advisors. Be sure to check back next Friday for next week’s top articles!
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.