RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of October 26, 2018

Posted by RIA in a Box

Nov 2, 2018 7:41:17 PM

Final SEC rule Reg BI

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, lessons learned while setting up an RIA firm, 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 October 26, 2018:

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  1. SEC's Clayton: Advice Standards Package Done by September, 'if Not Sooner' (Author- Melanie Waddell, ThinkAdvisor)

Melanie Waddell writes, "Securities and Exchange Commission Chairman Jay Clayton told ThinkAdvisor on Thursday morning that the commission is 'aiming to get [the advice standards package] done by September [2019], if not sooner.'” When Clayton was asked by ThinkAdvisor, "if the agency’s regulatory agenda setting out plans to finalize a rule by next September is merely a “placeholder” as some industry officials have said, and that a final rule is expected in the first quarter of 2019, Clayton responded: 'You hear a lot. I do not have a definitive timeline.' " Stay tuned but it does appear Reg BI could soon be finalized.

  1. IAA fears SEC will leave investor testing behind in rush to finalize advice rule (Author - Mark Schoeff Jr., InvestmentNews)

As reported by Mark Schoeff Jr., "In a rush to complete investment advice reform next year, the Securities and Exchange Commission might not pause to absorb investor testing on a key part of the proposal, according to an adviser advocate." As part of their reform package, the SEC included "a so-called client relationship summary, or Form CRS, that is designed to help investors understand the differences between investment advisers and brokers - in terms of services, standards of care and costs — so they can make an informed decision on which type of financial professional to use." Karen Barr, president and chief executive of the Investment Adviser Association ("IAA"), "worries the agency will leave investor testing of Form CRS behind." According to Ms. Barr, "In the desire to get this done quickly, they might not wait for rigorous investor testing and really absorb those results."

  1. SEC’s Extra Regs on RIAs Would Make It Harder to Go Independent (Author- Diana Britton, WealthManagement,com)

Earlier this year, the SEC opened a comment period on their Reg BI proposal which included a number of other proposals related to potential continued education and net capital requirements. "But Schwab’s Head of Legislative and Regulatory Affairs, Jeff Brown, criticized these 'extras' as imposing broker rules on independent advisors. It’s the brokerage industry’s way of making it more expensive and more difficult to become an independent advisor, he said." Karen Barr, CEO of the IAA, "believes the SEC is trying to fit a square peg into a round hole with these extra regulations." In addition Ms. Barr argued, "the additional regulations the SEC is considering includes federal licensing and continuing education requirements for employees of RIAs. But this is already handled by the states, so the SEC would be overstepping its jurisdiction."

  1. Top lessons learned during a breakaway transition (Author- Bob Nachman, InvestmentNews)

Over two years ago, Bob Nachman, a partner at Nachman Norwood & Parrott, an independent wealth management consultancy based in Greenville, S.C., and his team began to "explore whether the registered investment adviser platform was better for them than the independent broker-dealer world they were in." After successfully forming their RIA, they wanted to share some of the many lessons learned about the process. Some of his words of wisdom include, "do your research; choose a custodian that will make your practice better; give yourself time; and rely on the talents of your team." To read more about his experience, click here

  1. 3 Top-Tips on Multi-Gen Succession Planning (Author - Patrick Farrell, ThinkAdvisor)

In a new post from Patrick Farrell, he states, "independent financial advisors who are ready to retire often seek expert guidance on how to execute succession planning deals with younger advisors." Farrell continues by saying, "But independent advisors with family heirs to their business may not always feel the same need to connect with experts on how best to transfer their business to the next generation of their family.  And this can lead to serious missteps." The article includes "three best practices for conducting multigenerational succession planning for an advisory practice." Those best practices include: "seek out consultants who can help create succession plan that fits your needs; strike a balance between professional and personal goals; and put your heirs in a position to succeed well before the transition occurs." To read more details about the three best practices, click here

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Don't forget to check out last week's top RIA compliance news articles on increased enforcement actions against RIAs, succession planning, and the SEC's 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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