RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of October 22nd, 2021

Posted by RIA in a Box

Oct 29, 2021 4:48:35 PM

RIA Archiving, SEC regulation

Each week we are 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 Department of Labor's (DOL) decision to delay enforcement on the Fiduciary Rule, trending growth of advisors moving to SEC-registration, using testimonials under the SEC Marketing Rule, and the Securities and Exchange Commission's (SEC) focus on identity theft prevention and "orphan" accounts.  

Here are our top investment adviser compliance articles for the week of October 22nd, 2021:

A Guide to Transitioning from State to SEC Registration

    1. DOL delays fiduciary rule enforcement until February (Author- Mark Schoeff Jr., InvestmentNews) 

This past Monday, the DOL officially delayed the enforcement date of the Fiduciary Rule to January 21, 2022. This announcement follows the public pressure for an extension to comply with the rule by the wealth management industry. The DOL also announced the delay in enforcement for the documentation and disclosure requirements for rollovers until June 30th, 2022. Mark Schoeff Jr. adds that the industry anticipates further changes to the definition of a fiduciary related to retirement accounts before the end of 2021. 

    2. Trendspotter: Advisor Movement From State to SEC Registration Is Surging (Author– Melanie Waddell, Think Advisor)

In this article, Melanie Waddell discusses the rising trend of state-advisors moving to SEC registration as the investment advisor industry shows record-breaking growth. The article lists the driving factors as the following: 1) rising markets, 2) increased demand for fiduciary advice, 3) clients reassessing finances since the pandemic, 4) advisors getting more clients, and 5) consolidation. Waddell also highlights the increasing number of breakaway advisors joining RIAs through the tuck-in model. Most firms will begin the transition to SEC-registration at the end of their fiscal year, which is often December 31. 

    3. SEC testimonial rule ignores the rise of online reviews (Author – Tobias Salinger, Financial Planning)

Tobias Salinger sheds a light on the importance of online reviews and how popular online databases may be ruled out due to disclosure requirements stated in the SEC Marketing Rule. The article points out that now more than ever before, clients will turn to the digital footprints of advisors and financial firms prior to making their final selection on who to work with. RIA firms planning to display testimonials under the new rule will need to also clarify if the client has been paid for their comments, if there are any material conflicts of interest, and verify there is no misleading information within the testimonial.  

    4. Why the SEC Has Its Eyes on Advisors (Author – Thomas D. Giachetti, Think Advisor)

There has been a notable uptick of SEC examiner inquiries related to identity theft prevention. This article shares best practices for advisors to protect their clients information including enabling multi-factor verification on sites or portals containing non-public information. Thomas D. Giachetti also discusses which RIA firms are subject to regulation S-ID and recommends for advisors under this regulation to adopt a written identity theft prevention program.

    5. SEC Going After RIAs Who Collect Fees On Neglected 'Orphan' Accounts (Author – Tracey Longo, FinancialAdvisor)

Tracey Longo warns advisors that the SEC is paying close attention to accounts that have not been receiving ongoing service and advice, also referred to as "orphan" accounts. Accounts can become "orphaned" when an advisor departs from the firm or retires. While this issue has been on the SEC's radar for years, it is noted that the agency has started to take enforcement actions. It is recommended for firms to notify clients' if there is a change in who is advising their account or if they need to be referred to a new firm for not meeting asset minimums.

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Don't forget to check out last week's top RIA compliance news articles that focus on the interest of state-registered firms' in the Marketing Rule, reasons advisors move to the independent RIA model, anticipated delay for the Fiduciary Rule, and the SEC's current plans and priorities. 

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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