RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 20th, 2019

Posted by RIA in a Box

Sep 27, 2019 3:36:23 PM

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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 future of the fiduciary standard, how regulation technology (“Regtech”) is changing compliance, and how RIA firms should approach client communication when it comes to texting.

Here's our top investment adviser compliance articles for the week of September 20th, 2019:    

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1.  SEC May Be Onto Something: Form CRS (Author - Thomas D. Giachetti, ThinkAdvisor)

For some time now, the process and overall structure of the Form ADV has been thought of as long and complicated resulting in a disclosure document many retail investors do not read. Thomas D. Giachetti takes a closer look at what the Securities and Exchange Commission (“SEC”) is expecting to see on the new Form Customer Relationship Summary ("CRS"). Giachetti states, “The disclosure document now truly can serve as a basis to help the retail client understand the important issues relative to engaging an investment advisor – services, fees, conflicts, and any disciplinary history!”

2.  Have Fiduciary Standards Been 'Watered Down'? SEC's Clayton, Jackson Go Toe to Toe (Author - Melanie Waddell, ThinkAdvisor)

This past Tuesday, the House Financial Services Committee held a hearing regarding the integrity of fiduciary standards. The chairman and commissioners were all present to hear concerns and discuss how to move forward under Regulation Best Interest (“Reg BI”). Commissioner Robert Jackson stood out for voicing his concerns on how passing Reg BI “weakens the advisor fiduciary standard and increases risks for retail investors”. He went on to state, “My own view is that the law in the United States should be clear, that when there’s a conflict between an ordinary American investor and their financial advisor, the investor comes first.”

           3. Sponsor Insights: 5 Steps To Address The Compliance Gap For Secure Text Messaging (Author - Chris Andrew, Financial Advisor Magazine)

When working in any client-facing role, communication is the most crucial part of the job. As the times have changed, so has the expected form of communication. Now more than ever, clients are expecting almost instantaneous responses when reaching out to their advisor, especially when it is a text message. According to consulting company Gallup, texting is the most frequently used form of communication for Americans under 50, and it is important for investment advisors to stay up to speed and relevant with what their clients want and expect. Financial Advisor Magazine has outlined 5 easy steps to follow that ensure a beneficial solution to encourage smooth communication with clients.

4. How regtech is changing compliance at financial firms (Author - Ryan W. Neal, InvestmentNews)

As financial technology continues to evolve, Regtech is shaping the way compliance is managed at advisory firms. In this article, Ryan Neal highlights discussions around the growth of RegTech at a recent technology event held by the Securities Industry and Financial Markets Association. Kavita Jain, director of the Financial Industry Regulatory Authority Inc. (“FINRA”), emphasizes the importance of data security in relation to the use of technology by stating, “As firms use more outsourced technology, it’s important that firms update and refresh their review processes and supervisory procedures to stay current.”

5. Advisors' Social Media Use Surges Despite Compliance Challenges (Author - Melanie Waddell, ThinkAdvisor)

A recent survey conducted by the Investment Advisor Association (“IAA”) revealed that despite the compliance complications that come with the utilization of social media, its use among investment advisors is growing at a positive rate.  According to Melanie Waddell, “Amending the Advertising Rule (Rule 206(4)-1) and Cash Solicitation Rule (Rule 206(4)-3) under the Advisers Act regarding marketing communications and practices by investment advisors is on the SEC’s short-term regulatory agenda, the Evolution/Revolution report, released in mid-September, notes.” This potential amendment is driven by the growth of electronic platforms and its key role in many advisors’ marketing strategy.

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Don't forget to check out last week's top RIA compliance news articles focusing on the new Form CRS, mutual fund share class issues, and the growth of the RIA industry.


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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