RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 29th, 2020

Posted by RIA in a Box

Jun 5, 2020 4:47:53 PM

Top_Compliance_Articles_of_the_week-17Each 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 Paycheck Protection Program ("PPP") loans, the Securities and Exchange Commission's ("SEC") Regulation Best Interest ("Reg BI"), and a recent RIA in a Box partnership with Morningstar, Redtail, and Riskalyze.

Here's our top investment adviser compliance articles for the week of May 29th, 2020:

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          1. RIA in a Box, Morningstar Team With Fintech Firms to Assist Advisors: Tech Roundup (Author - Jeff                Berman, ThinkAdvisor)

RIA in a Box has partnered up with Morningstar, Redtail Technology ("Redtail") and Riskalyze to assist new RIAs during the COVID-19 pandemic with remote work and overall efficiency.  RIA in a Box stated that “the new Path to Independence Promotion will enable advisors who partner with RIA in a Box to register a new RIA to use cloud-based technology from the supporting firms, free of charge, based on their unique business needs through December.” This is an asset for advisors as they will gain free access to the proprietary MyRIACompliance cybersecurity platform which will “empower RIAs to efficiently construct, implement, and document a robust cybersecurity compliance program with a single solution.” Morningstar, Redtail and Riskalyze are also giving registrants the ability to secure contracts with them to receive complimentary access through the end of 2020 to: Morningstar Office Cloud, Redtail CRM and Riskalyze Elite.

2. Advisers are taking PPP loans for future needs as uncertainty lingers (Author - Emile Hallez, InvestmentNews) 

With the current uncertainty surrounded by the COVID-19 pandemic, firms are met with the tough decision of whether they should participate in the Paycheck Protection Program or not.  This is a difficult decision for many firms because they do not necessarily need the cash now but realizing it may be necessary in the future given the current climate caused by the COVID-19 pandemic. Jeffrey Levine, Buckingham Wealth Partners’ director of advanced planning stated that “advisers have also had to consider the perception associated with taking PPP loans. Because borrowers can be identified through public-records requests, advisers should disclose the loans on their Form ADVs with the Securities and Exchange Commission.” Due to the fact that there is not an unlimited supply of stimulus money as well as the perception associated with taking PPP loans, advisers are left with the difficult task of deciding whether they truly need the assistance or not.

         3. Advisors Scrambling to Meet Reg BI Compliance Deadline (Author - Jeff Berman, ThinkAdvisor)

As the June 30th deadline for broker-dealers and advisors to comply with the SEC's Reg BI and Form CRS quickly approaching, firms are hustling to meet the requirements. The SEC and Financial Industry Regulatory Authority ("FINRA") have been fairly transparent on what they are expecting out of firms. Associate general counsel at RBC Capital Markets, Lee Thoresen stated “One of the areas that is “particularly going to be a focus in these early days” is disclosure, including how firms have met the Reg BI disclosure obligation and the Form CRS requirements.” Regulators will want to know what firms are doing in terms of implementing policies and procedures to ensure that compliance is being met throughout the firm. With all of the challenges that firms are facing due to the COVID-19 pandemic, Hans Schemmel, director of Pershing’s retirement and insurance-based solutions at BNY Mellon stated “I think the good news is that the industry is moving in the right direction, and I think a lot of firms will be prepared.”

         4. Focus Financial Network, More Large RIAs Disclose PPP Loans as Congress Passes Changes to Program (Author - Patrick Donachie, Wealth Management)

Legislation passed by Congress has changed the period of time that small businesses have to disperse loans received through the Paycheck Protection Program and has updated its payback period. Several large firms have recently updated their Form ADVs to disclose funds used from receiving a PPP loan. According to Patrick Donachie, “’The firm used the PPP funds to continue payroll for the firm's employees, including employees primarily responsible for performing advisory functions for our clients, and make other permissible payments,’ Focus Financial Network’s Form ADV read.”

           5. DOL Sends Revised Fiduciary Rule to White House for Review (Author - Patrick Donachie, Wealth Management) 

According to the Office of Management and Budget ("OMB"), the U.S. Department of Labor ("DOL") has sent its revised fiduciary rule on Monday. According to Patrick Donachie, “The rule will be reviewed by the OMB before publication for a public comment period, which typically takes about 60 days. After further revisions following the comment period, the DOL will send the rule to the White House for final review and publication.” Industry experts weigh in on the topic and share predictions on timing of the finalization of the rule.

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Don't forget to check out last week's top RIA compliance news articles on the benefits of compliance software, the importance of business continuity planning, and how PPP loans could potentially complicate business for the wealth management industry in the long run.

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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