RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of November 29th, 2019

Posted by RIA in a Box

Dec 6, 2019 3:12:02 PM

RIA Compliance Regulatory News

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 the Securities and Exchange Commission's ("SEC") proposed amendments to the advertising rule, impacts of the Regulation Best Interest rule ("RegBI"), and the future of robo advice.

Here's our top investment adviser compliance articles for the week of November 29th, 2019:    

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1. Proposal to amend SEC testimonial rule to greatly expand advisers’ advertising efforts (Author - Blake Aikin, InvestmentNews)

This article written by Blake Aiken walks through past examples of compliance deficiencies incurred by investment advisers related to the six-decade-old Testimonial Rue.  As a result of these deficiencies brought on by the outdated rule, the SEC announced proposed amendments to the rule on November 4th, 2019. According to Aiken, “Significantly, the proposal would expand the scope of the rule by changing the definition of an advertisement. It would include certain communications that offer or promote a firm's advisory services to one or more persons, versus the current definition that covers communications to 10 or more people.” Aiken breaks down the details of the proposed rule and its impact on investment advisers.

2. Galvin Signs Off on Massachusetts Fiduciary Rule (Author- Patrick Donachie, Wealth Management)

In a direct response to the SEC’s Regulation Best Interest rule, William Galvin, Secretary of the Commonwealth of Massachusetts has signed off on a proposal to establish a fiduciary standard for both broker/dealers ("BD's") and investment advisors in the state.  According to Patrick Donachie, Galvin stated that, “My office has seen firsthand the serious financial harm that investors and savers have suffered as a result of a conflicted financial advice. Investors must come first.” The next step to finalizing the rule will be a hearing on the regulations.

         3. SEC issues FAQs on investment advice rule (Author - Greg Iacurci, InvesmentNews) 

On Tuesday, the SEC’s Division of Management and Division of Trading and Markets published the answers to four FAQs related to format and delivery requirements of Form ADV Part 3, otherwise known and Form CRS. “Most significantly, they stipulate that RIAs and brokerage firms should only submit one disclosure form instead of separate disclosures for each separate service they provide,” Greg Iacurci writes. The remaining three FAQ’s touch on delivery of Form CRS and creation of the Form.

         4.Tech Survey: Robos were expected to overtake planning. Here’s what actually happened (Author -  Sean Allorca, Financial Planning)

Despite predictions of robo advisors to catch up with traditional planning, industry data reveals that robo advisors are not being adopted as frequently as expected. This article breaks down the results of a recent Financial Planning Tech Survey, specifically looking at advisors’ perceptions of robo advice. As stated by Sean Allocca, “According to the latest Financial Planning Tech Survey, advisors predict that robo advice will be one of the top technologies to change wealth management over the next three years. In the same survey, robos beat out other buzzy technologies like artificial intelligence and advanced risk profiling.” Industry experts weigh in on the topic offering their personal views and predictions on the future of technology and robo advisers in the greater RIA industry.

           5. SEC Names Littman to Head Cyber Unit (Author - Melanie Waddell, ThinkAdvisor) 

Kristina Littman has been named chief of the SEC’s Division of Enforcement’s Cyber Unit. Littman has previously served as senior advisor to SEC Chairman Jay Clayton and joined the Division of Enforcement in 2010 as a staff attorney. “Littman has been the lead advisor to Clayton on matters involving the Division of Enforcement and Commission adjudications. She also has advised on regulatory and policy matters relating to cryptocurrencies and digital assets, international affairs, trading and markets and investment management,” according to Melanie Waddell.

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Don't forget to check out last week's top RIA compliance news articles focusing on the proposal to expand the definition of "accredited investor," the impacts of RegBI, and the future of cyber crime. 

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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