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 ("SEC") Inspector General report, the new president of the Financial Planning Association ("FPA"), and the latest trends in new wealth management technology.
Here's our top investment adviser compliance articles for the week of October 11th, 2019:
1. House approves bill requiring SEC to test investor disclosures (Author - Mark Schoeff Jr., InvestmentNews)
The SEC Disclosure Effectiveness Testing Act (H.R. 1815) passed in the House this week. With the passing of this bill, the SEC will now be required to test new disclosures from retail investors, make their findings public, and test existing disclosures as well. Rep. Sean Casten (D-Ill), author of the bill, explains, “This bill protects Americans by doing pretty basic market research to ensure that legally required disclosures can be understood by the average investor.” However, there does not presently appear to be support for this bill in the Senate.
With the beginning of fiscal 2020 on the horizon, the SEC Inspector General (“IG”) recently released their report highlighting management and performance shortcomings the SEC has been facing. A standout metric is the time between when an inquiry is opened and when enforcement action is actually taken. Regarding this matter, the IG report states that the SEC’s enforcement division “has again reported taking measures that include emphasizing expediency in quarterly case reviews, promoting best practices regarding efficiencies in various phases of the investigative process, leveraging data analytics capabilities, and conducting training on tools that expedite investigations.”
3. TD's Skip Schweiss to bring fiduciary chops to FPA presidency (Author - Ann Marsh, FinancialPlanning)
Skip Schweiss has officially been chosen to become president of the Financial Planning Association in 2021. Recently, many regulators and advisers have been struggling with the true meaning of fiduciary duty, and with several fiduciary regulations proposed or put in place within the last year or so, Schweiss seems to be the perfect fit due to his “fiduciary advocate” status. Schweiss explains, “Most FPA members are small business people. They don’t have the time to be engaged in these issues. They want to know their association is on top of these things, so that the planner can just pay attention to their business.”
Now that the SEC has issued the final version of Regulation Best Interest (“Reg BI”) and the new Form CRS, Fred Reish is working to provide a breakdown of each new regulation in a series of articles to create a better understanding as these regulations take effect. In his “Care for Advisors #13” article, Reish focuses on three of the most significant changes from Reg BI: Implicit Hold Recommendations, Recommendations of Account Types, Including Recommendations to Roll Over or Transfer Assets from One Type of Account to Another, and Dual-Registrants. Reish includes his thoughts on each of these three topics and works to create a discussion around each to present the topics from different points of view.
5. Wealthtech Weekly Update: AssetMark, Refinitiv, Stash (Author - Vasyl Soloshchuk, Financial Advisor Magazine)
Financial Advisor Magazine released their Wealthtech Weekly Update highlighting six different financial technology companies serving RIA firms. All six have either announced an upcoming partnership or an enhancement to their product or software that indicates exciting advancements in the industry. Among the highlights was the announcment that RIA in a Box now integrates with Riskalyze to help better automate client suitability and portfolio reviews.
Don't forget to check out last week's top RIA compliance news articles focusing on RIA cybersecurity, exam deficiencies, and the asset management advisory committee formed by the SEC.