RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of October 4th, 2019

Posted by RIA in a Box

Oct 11, 2019 3:00:00 PM

RIA Compliance Regulatory News

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 RIA cybersecurity, common exam deficiencies, and the recent formation of an asset management advisory committee by the Securities and Exchange Commission ("SEC").

Here's our top investment adviser compliance articles for the week of October 4th, 2019:    

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1.  Small advisers struggle with cybersecurity demands of regulators (Author - Ryan W. Neal, InvestmentNews)

A growing number of compliance deficiencies for small firms (less than $100 million in assets under management) are causing concern for regulators. “The most common problems were a lack of vulnerability testing, insufficient procedures around securing devices and internet connectivity, weak passwords and having no, or inadequate, cybersecurity insurance,” Ryan Neal states, referring to 2019 coordinated examinations. Industry experts including RIA in a Box President, G.J. King weigh in on the issue noting that smaller firms often feel overwhelmed and helpless when it comes to cybersecurity. King mentions, however, "By nature of being small, they have the chance to establish a culture of security. At a larger corporation, it's harder to instill that culture and you end up having more weaknesses."

2.  Advisors Can Expect SEC Scrutiny of ‘Low-Cost’ Strategies, Rollovers, Attorneys Say (Author -Tracey Longo, Financial Advisor Magazine)

Securities Attorneys at Drinker Biddle warn advisors of the potential compliance issues that may arise when not recommending the lowest-cost strategy to clients. Although recommending the lowest-cost strategy or product is not required by the SEC, advisors must be prepared to provide adequate reason behind the decision. Fred Reish states, “Firms need to be vigilant that their compliance and supervisory practices, policies, and procedures are strong in this area, and further that the recommendations made to place a client in a higher-cost investment or strategy are fully supportable and well documented.” In addition, rollovers are also a top concern. As quoted by Tracey Longo, “’the SEC appears likely to increase its scrutiny of investment advisers’ practices relating to rollovers,’ Reish warned.

           3. Succession Planning Essentials For Solopreneurs (Author - Thomas Coyle, Financial Advisor Magazine) 

Often advisors fail to consider what would happen to their firm in the event of a permanent business interruption. “Solopreneurs” find this process especially challenging. According to Thomas Coyle, “...most entrepreneurs don’t know how much their businesses are worth, more than three quarters count on selling their businesses to fund their retirements, and more than half of them either don’t have enough life insurance or lack it altogether.” Coyle walks through the succession-planning process and the steps solo advisors should take when creating their succession plans.

4. Advisor Viewpoints on Compliance and Regulation (Author - WealthManagement.com Staff, WealthManagement)

Staff members at WealthManagement.com conducted their 2019 survey of their regulatory and compliance readers and have compared it to their 2017 survey findings. To come as no surprise, Cybersecurity comes in as the top concern, with data integrity and social media not far behind. The comparison between 2017 and 2019 has been mapped out on multiple graphs to visualize the difference.

5. SEC Launches Asset Management Advisory Committee (Author - Melanie Waddell, ThinkAdvisor)

On Wednesday, the SEC announced the formation of an Asset Management Advisory Committee. According to Melanie Waddell, “The committee will offer diverse perspectives on asset management and related advice and recommendations, addressing such topics as trends and developments affecting investors and market participants, the effects of globalization, as well as changes in the role of technology and service providers.” This multidisciplinary team will represent the views of retail investors, institutions, and other market participants. Committee members include employees of Charles Schwab, Fidelity Institutional, and more.

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Don't forget to check out last week's top RIA compliance news articles focusing on  RIA cybersecurity, new product announcements from fintech providers, and how to create the best contingency plan for your RIA firm. 


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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