RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of November 27th, 2020

Posted by RIA in a Box

Dec 4, 2020 3:35:50 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 the North American Securities Administrators Association's ("NASAA") most recent model rules, the importance of succession planning, and successful Securities and Exchange Commission ("SEC") exams during the pandemic. Here's our top investment adviser compliance articles for the week of November 27th, 2020:

10 Steps to Prepare for a Reguatory Exam

           1. NASAA Approves Continuing Ed Requirements for Investment Advisor Reps (Author – Tracey Longo, Financial Advisor Magazine)

Earlier this week, the North American Securities Administrators Association (“NASAA”) voted to adopt a continuing education (“CE”) model rule for investment advisor representatives (“IARs”). The Association has been discussing this rule and its requirements since February, and now that it is in effect, IARs will need to take a total of 12 hours of continuing education annually, focusing on two main components. Those two components are products and practices and ethics, focus areas that NASAA president, Lisa A. Hopkins, believes “will help promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices.” This is the first time advisors will be required to complete a continuing requirement to maintain their licenses with state regulators, and has been a long time coming. Moving forward, “it will be up to each state regulator to adopt the new CE requirements in order for them to effective in their respective jurisdictions.”

         2. NASAA Adopts Rule on CE Credits for Investment Advisors (Author – Melanie Waddell, Think Advisor)

In the months leading up to the adoption of the North American Securities Administrators Association (“NASAA”) continuing education (“CE”) model rule, the Association conducted a survey to uncover what regulators considered relevant content. In addition to the survey, members of NASAA worked tirelessly to create a course that would help “close the gap” between investment adviser representatives (“IARs”) and other financial professions that have required CE courses for some time now. Alongside the CE model rule, NASAA also adopted a model rule that addresses a firm’s policies and procedures and what will be required moving forward. “Our goal with this consolidated and streamlined model rule is to help enhance the culture of investment adviser regulatory compliance to minimize conflicts and risks to better serve investors,” NASAA president Lisa Hopkins stated.

        3. Overcoming 3 Major Barriers to RIA Succession Planning (Author – Ed Swenson, WealthManagement)

As SEC Chairman Jay Clayton will be stepping down at the end of the year, he had what is likely his last testimony before the Senate Committee on Banking, Housing and Urban affairs. Among the issues discussed, the commission’s Share Class Selection Disclosure Initiative was defended by Clayton. The share class initiative has been denounced by some since individuals and firms can be subject to oversight and unknowns. Clayton’s defense although, is having clarity for each case in advance of enforcement decisions. He upholds “the enforcement division has the belief to be on the right side of the law in these enforcement decisions.” Other topics addressed in the hearing were expanding access to exempt securities offerings and the SECs revisions to the shareholder proposal process.

         4. SEC Examined 15% of RIAs Despite Pandemic: Driscoll (Author – Melanie Waddell, Think Advisor)

Even in the face adversity and in a fiscal year like no other, the Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) completed over 2,950 exams this year, with 15% percent of those exams being SEC-registered advisers. Pete Driscoll, director of OCIE, explained that the exam division continued to carry out exams remotely “through correspondence, and we are working with registrants to address the timing of our requests, availability of registrant personnel, and other matters to minimize disruption.” The division’s examiners “engaged in outreach and other efforts with many investment advisers and investment company complexes to assess the impacts of Covid-19 and to gather information, including challenges with operational resiliency and fund liquidity,” Driscoll added.

       5. 3 Hires that Help RIA Firms Enter the Elite (Author – Devin McGinley, InvestmentNews)

Devin McGinley dives deeper into the results of the 2020 InvestmentNews Elite RIA Study, in partnership with ETrade Adviser Services, and discusses staffing strategies and how it has benefitted the productivity of the industry’s top registered investment adviser (“RIA”) firms. McGinley stated, “The median elite advisory firm in the study had about twice the number of professionals, but three times the total staff of other practices. By hiring more support and specialist staff, elite firms achieve double the processional productivity, as measured by revenue per adviser and partner, of other firms.” In this study, client service was the main focus when hiring specialists, while technology had the lowest number of specialists, with these positions mostly being outsourced.

Download 10 Tips for Business Continuity and Disruption Planning Checklist

Don't forget to check out last week's top RIA compliance news articles that focus on the Securities and Exchange Commission's ("SEC") latest risk alert on the compliance rule, E-signature rules, the Share Class Initiative.

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.

RIA Compliance & Practice Management

Stay up to date on the latest RIA compliance, operations, and technology topics.

Hear from industry experts as they keep you up to date on the latest regulatory developments and practice management topics.

Subscribe to Email Updates

Recent Posts