RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 10th, 2021

Posted by RIA in a Box

Sep 17, 2021 2:49:30 PM

RIA Archiving, SEC regulation

Each week we are 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 new Advisor Virtual Desktop and Dashboard solution, cybersecurity threats to RIAs, regulatory changes for compensation model requirements, and a deep dive on the independent RIA model. 

Here's our top investment adviser compliance articles for the week of September 10th, 2021:

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    1. RIA in a Box Launches Virtual Desktop, Compliance Dashboard for RIAs: Tech Roundup (Author – Jeff Berman, ThinkAdvisor)

In this week's Tech Roundup, Jeff Berman discusses RIA in a Box's new cloud-based Advisor Virtual Desktop and MyRIACompliance Dashboard. The new solution is designed to help RIA firms of all sizes protect against cyberattacks and boost productivity, while integrating with regulatory compliance activities. RIA firms will gain access to cyber defense technologies, including multi-factor authentication, data backup, disaster recovery, web filtering, vulnerability management, and access rights and controls. 

Berman also highlights Wells Fargo's plans to use Microsoft Azure and Google Cloud for a new digital infrastructure. Additionally, MSCI released an Implied Temperature Rise solution to provide investors with climate risk data associated with companies' investment portfolios.

    2. As Cyberthreats Mount, Advisors Have a Target on Their Backs (Author – Kenneth Corbin, Barron's)

This article highlights the rising number of cyberattacks on wealth management firms, specifically during the pandemic. Wealth Management firms are common targets of hackers, considering their access to money and sensitive client information. Chief Information Security Officer at Itegria, a division of RIA in a Box, mentions how hackers have been getting increasingly sophisticated and often using emails to gain access to a firm's system. 

Corbin points out that regulators focus on how firms handle cybersecurity and protect their clients' private information. Industry experts suggest firms implement vigorous and continuous training for their employees and contractors to increase awareness of emerging threats. 

    3. SEC Will Demand Firms Eliminate Compensation Conflicts, Experts Predict (Author - Tracey Longo, Financial Advisor)

The SEC and FINRA announced they will require RIA firms and broker-dealers to discontinue using conflicted compensation practices, such as 12b-1 fees and differential compensation. As part of the enforcement efforts, firms and individual sales professionals who fail to stop using these compensation practices will receive fines and restitution orders. Tracey Longo points out that regulators will also focus on dual-registrants, regarding account types associated with these compensation conflicts. 

    4. Defining the Fully Independent Model for Financial Advisors (Authors – John F. Sullivan, Wealth Management)

John Sullivan provides a deep dive on the meaning behind the industry term "independent" when referring to an RIA, compared to W2 advisors and wirehouse firms. He declares that of the four main advisor models - RIA owner, broker-dealer employee, broker-dealer affiliate and RIA affiliate — only an RIA owner is recognized as having full autonomy. The main determining factor of independence boils down to Form ADV. The ADV describes (in plain English) how the firm conducts business, manages clients, uses marketing initiatives, structures compensation models, etc. Sullivan points out that only an advisor with full control and influence of the Form ADV has the true meaning of "full independence." 

    5. More advisory firms using flat fees, survey finds (InvestmentNews)

This article highlights compensation models and billing trends for RIA firms. According to a recent study by technology provider, Advyzon, it is more common for firms with over $100M AUM to use flat fee models. Findings from the study also suggest an increase in the billing practice of calculating fees based on average daily balances, while most firms continue to conduct quarterly billing based on beginning or ending balances. 


Download Our Free RIA Cybersecurity Compliance Checklist

Don't forget to check out last week's top RIA compliance news articles that focus on compliance with the fiduciary rule, the Securities and Exchange Commission's ("SEC") marketing rule, cybersecurity best practices, and practices for labeling environmental, social, and governance "ESG" funds. 

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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