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 in a Box's integration with the SEI Wealth Platform, COVID-19 cyber threats, and feedback the Department of Labor ("DOL") received on the fiduciary rule replacement. Here's our top investment adviser compliance articles for the week of September 4th, 2020:
1. RIA in a Box Added to SEI Wealth: Tech Roundup (Author – Jeff Berman, ThinkAdvisor)
Earlier this week it was announced that RIA in a Box’s MyRIAComplianceTM software has integrated with the SEI Wealth Platform, which is a part of SEI’s Independent Advisor Solutions (“IAS”). This integration “allows joint clients of RIA in a Box and IAS to automate their compliance and registration processes within RIA in a Box to more easily complete registration and Form ADV filings”, both firms stated. Advisors will be able to have their data from the SEI Wealth Platform populate within MyRIACompliance which will allow firms to “automatically track the necessary jurisdictions to register or notice files based on the location of their clients, better enabling them to meet the industry’s evolving regulatory requirements.”
2. ICI Applauds Bill to Rein in Lawsuits Over Fund Advisor Fees (Author – Melanie Waddell, ThinkAdvisor)
Melanie Waddell discusses The Mutual Fund Litigation Reform Act, H.R. 8188, which was introduced this past Tuesday by Rep. Tom Emmer, R-Minn. This piece of legislation “would amend Section 36(b) of the Investment Company Act of 1940, which allows the Securities and Exchange Commission and fund shareholders to sue a mutual fund advisor on the grounds that advisory fees are excessive and constitute a breach of the advisor’s fiduciary duty”, explains Waddell. Paul Schott Stevens, president and CEO of The Investment Company Institute (“ICI”), has shown support for the act, saying it “will help federal courts to terminate before trial abusive lawsuits against mutual fund advisors, while preserving the right of shareholders to bring meritorious actions.”
Since the beginning of the pandemic when most of the population made the switch to working remotely, cybersecurity has always been a hot topic. As we move into yet another month of working from home, the threats of cybersecurity are greater than ever. From email phishing to software viruses, many advisors are on edge, and for good reason. John Kador also points to “a lack of hard disk encryption, operating systems without the latest patches, and antivirus and malware software that were not fully updated were all too common failings among advisors working from home” being internal cyberthreats as well. Learn more by scrolling through the linked infographic within the article.
4. How Our Response to the Pandemic Created a Better Normal (Author – Scott Hanson, InvestmentNews)
Scott Hanson, co-founder of Allworth Financial, has found that not only has his RIA firm been able to conduct business as usual in this new normal, but he has seen his advisors and clients thrive as a result. “Except for April, we’ve added new clients every month this year and, even after accounting for the market rally, we’ve increased our AUM. Further, we’ve had very few clients leave our firm. In fact, we are experiencing the lowest client attrition we’ve ever had”, explained Hanson. He also credits most of their success to consistent and thorough communication plan AllWorth Financial initiated from the beginning. From ensuring all advisors were calling and making contact with clients to sending personalized emails and resources to let clients know they aren’t just a number, Hanson believes “much of our response, rather than merely being temporary until things return to normal, has, I believe, for use created a better business normal that’s here to stay.”
5. DOL Knocked for Rushing Fiduciary Rule Replacement (Author – Jessica Mathews, Financial Planning)
Following a five-and-a-half-hour hearing with the Department of Labor (“DOL”) on the new fiduciary rule replacement, one common thread became clear – the parties involved believe the whole process has been rushed. Kim O’Brien, CEO of the Federation of America for Consumer Choice, said, “The speed of the process is concerning. The department has collectively received dozens of comment letters, raising a raft of issues. We cannot begin to address them all in a hearing like this”. There is only a small possibility this backlash will slow down the adoption of this new rule, “the comments resurfaced long-standing debate over the nature of fiduciary advice”, Jessica Mathews explains. Which brought into play the concerns of alignment with Regulation Best Interest (“Reg BI”), “a plus for those who represented broker-dealers while a major con for investor advocates”. While moving forward with the proposal, the DOL staff said they would take all feedback and criticism into consideration.
Don't forget to check out last week's top RIA compliance news articles that focus on Form CRS, The North American Securities Administrators Association’s ("NASAA") Continuing Education rule, and the increasing importance of a business continuity plan ("BCP").