RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of October 23rd, 2020

Posted by RIA in a Box

Oct 30, 2020 4:44:02 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") Regulation Best Interest ("Reg BI") roundtable, implementing zero-trust cybersecurity, and what a post-COVID world may look like for advisors. Here's our top investment adviser compliance articles for the week of October 23rd, 2020:

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      1. Reg BI Roundtable Highlights ‘Good Faith’ Compliance Efforts, Disciplinary Disclosure Pitfalls (Author – Patrick Donachie, WealthManagement)

Earlier this week, the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) co-hosted a virtual roundtable to discuss observations and the overall success of Regulation Best Interest (“Reg BI”) and the customer relationship summary (“Form CRS”). The main topic was the lack of disciplinary history disclosures across the board, with Jim Wrona, vice president and general counsel at FINRA calling it “the biggest issue” since the rules implementation. Jay Clayton, SEC Chairman, also weighed in stating that “it’s now even more apparent that historically, before Form CRS, this information was not being brought to the attention of retail investors as it should have been.”

2. Why Firms Need Zero-Trust Cybersecurity, Especially Now (Authors – Jason Lish and Sid Yenamandra, ThinkAdvisor)

Jason Lish, Chief Information Security Officer ("CISO") of Advisor Group, and Sid Yenamandra, CEO of Entreda, a cybersecurity solutions provider, discuss the importance of taking zero-trust cybersecurity measures during COVID-19. This includes keeping corporate networks intact while also safeguarding firm and client data. However, because of COVID-19 advisors are working remotely, creating a much greater challenge for firms to have full protection from cyberattacks. Lish and Yenamandra explain further, “To maintain a zero-trust approach under these circumstances, while also maintaining system stability and performance, firms should rethink their network architecture and the deployment of their cyber defenses to more closely align with how workers are accessing data.”

         3. Best Practices for Financial Adviser Text Messaging (Author – Marianna Shafir, InvestmentNews)

As a result of COVID-19, the wealth management industry has become more digital and technology-centric than ever before. Convenience also plays a major role, with more and more clients preferring to communicate with their advisor over text message, rather than an email or phone call. However, advisors must be careful when conducting business over text message and keep a few best practices in mind. Marianna Shafir discusses the top three best practices further and what to consider when selecting a third party to monitor client communication and record keeping.

         4. Investing in Independence: How Investors in Wealth Management Firms are Helping Wirehouse Advisors Make the Leap (Author – Louis M. Diamond, WealthManagement)

Louis A. Diamond discusses the benefits of going independent and why so many advisors are making the switch, stating that “the independent space is continually validated by top wirehouse teams that made the leap, and coupled with the availability of best-in-class options for technology, platforms, and products – a multitude of capital providers and strategic minority investors have made their way into the space.”

           5. How Advisors are Adapting in a Post-COVID World (Author – Succession Link, Financial Advisor Magazine)

Ever since COVID-19 first hit headlines in the spring, advisors have been working hard to adapt and stay relevant both with their clients and in the industry. Succession Link touches on six areas the financial industry needs to focus on to stay afloat in a post-COVID world. The area that has gotten the most attention is cybersecurity, with advisors working remotely and not always having the most reliable internet connect means that “financial institutions are at risk for cyber-attacks now more than ever before.” Succession Link also mentions Streamlining Portfolio Management, Fiduciary Status, Virtual Meetings, Accelerated Retirements, and Firms Downsizing.

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Don't forget to check out last week's top RIA compliance news articles that focus on the successful use of video by advisors, the SEC still finding omissions of disciplinary history on Form CRS, and what should be considered when deciding to go independent.

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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