RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of November 6th, 2020

Posted by RIA in a Box

Nov 13, 2020 4:30:22 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 Securities and Exchange Commission's ("SEC") latest risk alert on multi branch office risks, the recent growth of the RIA industry, and how beneficial social media can be for advisors. Here's our top investment adviser compliance articles for the week of November 6th, 2020:

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           1. SEC finds compliance deficiencies in RIA branch offices (Author – Mark Schoeff Jr., InvestmentNews)

Mark Schoeff Jr. dives deeper into the latest SEC compliance risk alert that found “widespread compliance deficiencies at branch offices of registered investment advisory ('RIA') firms.” Many of these deficiencies were found in outdated policies and procedures, Code of Ethics, and fiduciary obligations involving fees, expenses, and advertising. The risk alert also stated that compliance risk may increase “when the main and branch offices have different practices. For example, advisers that do not monitor, review, and/or test their branch office activities may not be aware that the compliance controls they have adopted are not effectively implemented or do not appropriately address the intended risks and conflicts in these remote locations.”

         2. SEC: Tips, Complaints and Referrals up 40% (Author – Ming Li, Financial Advisor IQ)

The Division of Enforcement of the Securities and Exchange Commission (“SEC”) has reported that within the 2020 fiscal year, which ended September 30, they have received 23,650 tips, complaints, and referrals (“TCRs”), which is 40% more than the TCRs received in 2019. The majority of the TCRs came in during the height of the pandemic, causing a 71% surge compared to the same period last year. In response to the overall increase or TCRs and inquiries in the 2020 fiscal year, the SEC formed a Coronavirus Steering Committee that “triages each TCR to determine where they should open an inquiry or investigation”, the report stated.

        3. RIA Industry Sees Record-Breaking Growth in Firms and Assets (Author – Tracey Longo, Financial Advisor Magazine)

According to the 2020 Evolution Revolution Report, co-sponsored by the Investment Adviser Association (“IAA”) and National Regulatory Services (“NRS”), the investment advisor industry has seen a tremendous amount of growth within the last year. Among other findings, “the number of SEC-registered investment advisors hit an all-time high of 13,494 advisory firms, a net increase of 3.9% over the previous year with assets increasing 16.2% to $97.2 trillion”, the report stated. Karen Barr, CEO and president of IAA, expanded further, “In every key metric – from industry size to assets under management to high quality jobs created – the investment adviser profession showed solid growth, underscoring our critical value to investors, to the economy and to our capital markets. Investors continue to recognize the value of fiduciary advice, turning to investment advisers to help them achieve their goals and navigate their financial futures.”

         4. Deciphering ‘Best Interest’ in Reg BI (Author – Melanie Waddell, ThinkAdvisor)

Even several months after the submission deadline of the Securities and Exchange Commission’s (“SEC”) Regulation Best Interest (“Reg BI”), experts across the industry are still struggling to fully understand the term “best interest”. Across the industry, the main issue with Regulation Best Interest is that it does not seem to align with the fiduciary standard. SEC Chairman Jay Clayton aims to help investors understand the two directions they can choose, and what it means for RIAs to be held to the fiduciary standard, “it’s a combination of care and loyalty. You own somebody a duty of care, and you can’t put your interests ahead of their interests.” As for Form CRS, the SEC has been focusing on the content and implementation of the document during firm examinations.

       5. Twelve Benefits of Social Media for Financial Advisors (Author – Stephen Boswell, WealthManagement)

Stephen Boswell shares his thoughts on the benefits of social media and how these platforms are helping advisors “deepen client relationships and be seen as a thought leader in the community. This primes the pump for retention, referral flows” and prospecting. Boswell dives further into his overall strategy in a slideshow with different points to keep in mind, with the first few points being 1) Build Top of Mind Awareness; 2) Showcase Thought Leadership; 3) Provide Social Proof and 4) Target Friends of Clients.

Download the Top 10 Social Media Compliance Guidelines for RIA Firms

Don't forget to check out last week's top RIA compliance news articles that focus on the SEC's drop in enforcements, whether CCOs should be held personally liable, and the importance of cybersecurity.

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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