RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 14th, 2021

Posted by RIA in a Box

May 21, 2021 2:32:41 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 call for the Securities and Exchange Commission ("SEC") to conduct investor testing on Form CRS, starting an RIA firm, the return of in-person conferences, and the Department of Labor's ("DOL") withdrawal of the independent contractor rule. 

Here's our top investment adviser compliance articles for the week of May 14th, 2021:

View Our Form CRS Requirements Infographic Here 

     1. SEC's Crenshaw Wants Investor Testing on Reg BI, Form CRS (Author – Melanie Waddell, Think Advisor)

Last week, SEC Commissioner Caroline Crenshaw called for investor testing to be performed on the effectiveness of Form CRS and Regulation Best Interest (“REG BI”). Crenshaw pointed out that the SEC has not done any testing to ensure these disclosures are working as intended and she believes that the disclosures are regularly filled with technical terms, making it difficult for retail investors to make informed decisions. The article tells readers how the SEC conducted testing on a sample Form CRS, only before finalizing the rule, and the agency has not acted since to ensure investors understand the key aspects of the disclosures.

     2. 10 More FAQs About Moving to the RIA Model (Author – Brad Wales, Think Advisor)

In this slideshow, Brad Wales covers 10 key points for advisors considering moving to the RIA model. Wales informs readers’ that there is no minimum AUM requirement to start an RIA, but the number can likely influence the vendors you choose such as custodians and technology tools, and most importantly, it will determine whether you register with the SEC or state. He shares that the standard industry practice for registration and compliance is to partner with a specialty compliance consulting firm. Wales also discusses the difference in the approval and disclosure process related to conducting outside business activities between RIAs and broker-dealers. He concludes the slideshow by stating that most advisors wish they would have transitioned to the RIA model sooner.

     3. What advisers really want from the next in-person conference (Author – Jeff Benjamin, InvestmentNews

In this article, Jeff Benjamin highlights the expectations of meetings and conferences from the wealth management industry, in a post-virtual-only world. From recent surveys conducted on financial advisers, the results show that the majority values in-person events over virtual events. Advisers rated factors of consideration for events such as content, registration fees, and networking opportunities as very important. Presenters and famous speakers surprisingly had low ratings of importance. There are several hybrid events in near future, leaving event planners with the job of thoughtfully catering to in-person and virtual attendees.

     4. DOL Withdrawal of Independent Contractor Rule Threatens Indie Advisor Business Model: FSI (Author – Jeff Berman, Think Advisor)

Jeff Berman brings attention to the potential compliance headaches and litigation fees for independent financial advisers due to the recent withdrawal of the Independent Contractor Rule. The rule had determined whether an individual would be defined as an independent contractor or an employee, but industry experts share that the rule also made it difficult for contract workers to receive minimum wage and/or overtime pay.

Advisers that are part of the Financial Services Institute (“FSI”) are collectively communicating that the independent contractor status is essential to their business models. There are shared concerns over the loss of opportunity to be an independent business owner, which the advisers depend on for flexibility. The article concludes with the advice for independent advisers to stay up to date with the upcoming developments and participate in opportunities to talk to members of congress.

     5. FSI Sues DOL Over Independent Contractor Rule Withdrawal (Author – Patrick Donachie, Wealth Management)

This article sheds a light on the Financial Services Institute’s (“FSI”) fight against the DOL’s withdrawal of the Independent Contractor Rule. FSI is a brokerage industry advocacy group, which has joined the lawsuit against the DOL, claiming the withdrawal violated federal law. The DOL introduced the intent to withdraw the rule in March 2021, claiming it was inconsistent with the Fair Labor and Standards Act, therefore causing confusion for workers and businesses.

The President of FSI, Dale Brown opposes the DOL’s stance, stating the “withdrawal will result in the return to the confusing and conflict interpretations previously applied by differing courts, causing our members and other properly classified independent contractors to divert time and resources to defending their independent contractor classification from unnecessary challenges.”

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Don't forget to check out last week's top RIA compliance news articles that focus on Gary Gensler's start as Chairman for the Security and Exchange Commission ("SEC"), the Secure Act 2.0, and the Department of Labor's (DOL) fiduciary exemption. 

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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