RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of November 9, 2018

Posted by RIA in a Box

Nov 16, 2018 4:30:44 PM

SEC Form CRS finalized

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 succession planning, changes coming to all 88 local Financial Planning Association ("FPA") entities, and the Securities and Exchange Commission ("SEC") Regulation Best Interest ("Reg BI") proposal. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of November 9, 2018:

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  1. Best Interest and Best Practices #9 (Author- Fred Reish,

In his 9th article discussing the SEC's "best interest" proposal, Reish dives into the hot topic, "what does best interest mean?" Reish starts by stating, "As I read the guidance issued by the Department of Labor (DOL), the Securities and Exchange Commission (SEC), and New York State, there are actually two different best interests. The first is a standard of care and the second is a duty of loyalty. Of the two, the duty of loyalty is the easiest to define because, in all of the guidance it boils down to a requirement that an advisor cannot put his interest ahead of the investor’s." He continues by reviewing the definitions of each agency. To read more on the topic, click here.  

  1. Morningstar: DOL fiduciary rule reduces inflows to mutual funds with high loads (Author - Mark Schoeff Jr., InvestmentNews)

As reported by Mark Schoeff Jr., in a Morningstar Inc. report released Thursday, "The Labor Department's fiduciary rule reduced the amount of investor money that's allocated to mutual funds that pay brokers a premium to sell them." Given the death of the DOL fiduciary rule earlier this year, "it's unclear whether this trend in reduced inflows will continue under the Securities and Exchange Commission's advice reform proposal designed to raise the standard of care for brokers." The SEC is expected to deliver a final advice rule by the middle of 2019. Stay tuned. 

  1. The new normal of succession planning (Author- Joni Youngwirth, InvestmentNews)

With more advisers working past traditional retirement age, advisers,"like their clients, they, too, want to remain relevant. This has many advisers reconsidering when to stop working or what type of career to pursue next." By pushing back the retirement age, established succession plans might hit a snag. According to a recent article by Joni Youngwirth in InvestmentNews, "some advisers who have found a successor, trained that individual and have confidence in his or her ability to lead the business may be having second thoughts. They may put off signing the buy-sell agreement, which, in turn, puts them at risk of losing their heir apparent." To read more about the issues, click here

  1. FPA Splits with Financial Coalition Partners on State Regulation (Author- Karen Demasters, Financial Advisor Magazine)

According to a recent post by Karen Demasters, "the Financial Planning Association disagrees with its Financial Planning Coalition partners on the issue of state versus federal regulation of financial planners." Demasters continues by stating, "the other members of the Financial Planning Coalition, the Certified Financial Planner Board of Standards and the National Association of Personal Financial Planners, feel there should only be regulations on the federal level. The FPA also says it is ready to lobby on regulatory issues on both the state and federal levels."  To read more about the issues, click here

  1. FPA to fold all 88 local entities into one (Author - Ann Marsh, FinancialPlanning)

As reported by Ann Marsh, "Aiming to create a streamlined experience for its members nationwide, the FPA plans to wrap up all of its 88 chapters around the country into a single legal entity, starting in 2020." The FPA of Greater Kansas City chapter president, George Fernández, said, "by offloading accounting, legal, tax-filing and other operational tasks, the FPA of Greater Kansas City will be able to focus more energy on activities that most interest its members." Scott Kahan, head of FPA of Metro New York, said, "It's something that should have been dealt with many, many years ago." Kahan continued by saying, "the national FPA wants 'to be able to really be an organization for the 21st century.'"

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Don't forget to check out last week's top RIA compliance news articles on how a Democratic House will impact investment advisers, the increase in RIA-related enforcement actions, and the SEC's Regulation Best Interest proposal. Be sure to check back next Friday for next week’s top articles! 

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..

Topics: RIA Compliance

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