RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 17th, 2021

Posted by RIA in a Box

Sep 24, 2021 4:37:20 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 systems to prevent financial exploitation of elderly, the Securities and Exchange Commission's "SEC" top priorities, Form CRS, and the North American Securities Administrators Association "NASAA" upcoming regulatory focus areas. 

Here's our top investment adviser compliance articles for the week of September 17th, 2021:

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    1. State regulators: Advisers fall short in guarding against senior financial abuse (Author – Mark Schoeff Jr., InvestmentNews)

Mark Schoeff Jr. sheds light on the lack of internal systems within state-registered RIA firms, to identify and address financial exploitation of elderly clients. This determination comes from the findings of exams conducted earlier this year by the North American Securities Administrators Association "NASAA". President of the NASAA, Lisa Hopkins describes how she hopes the findings from the survey will lead to earlier detection and reporting of suspected elderly abuse. 

The article also mentions additional findings from NASAA's exam sweep, concluding that the top five areas with deficiencies were registration, books and records, contracts, supervision and compliance, and advertising.

    2. 4 SEC Hot Buttons Advisors Should Address Immediately (Author – Thomas D. Giachetti, Think Advisor)

This article covers four "hot buttons" under the regulatory spotlight, that advisors should address right away.  The four areas of concern include the following: 1) margin interest, meaning advisors should assess any instances of clients being billed on higher margin values, as the SEC is actively seeking reimbursement for clients unless there is a clear 2A Brochure disclosure, 2) billing on cash, especially in this low-yield environment, 3) using or being associated with wrap-fee programs, and back-tested hypothetical presentations. 

    3. Fiduciary advocates call on SEC to fix Form CRS (Author – Mark Schoeff Jr., InvestmentNews)

Form CRS still holds its position as a hot topic in the wealth management industry, specifically gaining attention from fiduciary advocates. The Institute for the Fiduciary Standard called on the SEC to improve the disclosure document which should be used to clealry define differences between investment advisers and broker-dealers. Mark Schoeff Jr. discusses the findings from a recent study conducted by the Insititute for the Fiduciary Standard, concluding that the document is often full of financial jargon versus being in plain language for investors to comprehend. The artidcle points out that members of the SEC have responded by showing support for future plans to reassess Form CRS. 

    4. Texting: The Holy Grail for Modern Financial Services Professionals (Author – Michael Boese, Wealth Management)

Michael Boese shares how texting has become the next best medium for financial advisors to communicate with their clients and prospects. Compared to email, text messages yield a much higher open rate, which Boese attributes to the lack of spam via text messages.

Advisors must consider how they will remain in compliance if they choose to go the texting route. The article mentions the complications associated with collecting and monitoring text messages, as well as differentiating what is friendly communication versus professional advice. Complications aside, it is suggested for firms to consider secure and compliant texting solutions to drive productivity and sales. 

    5. New NASAA President to Prioritize Expungements, Digital Assets (Author – Patrick Donachie, Wealth Management)

The recently appointed President of NASAA, Melanie Senter Lubin announced the organization's top priorities during her first public address. Lubin discussed plans to reevaluate the expungement process for advisors and brokers as she believes it to be an " extraordinary event granted only in particular cases" and that updates would protect investors deciding which advisors to trust with their financial wellbeing. Additional priorities include elderly investor protection initiatives and cryptocurrencies and digital assets.  The NASAA's focus on cryptocurrencies and digital assets has carried over from the pervious year, noting a significant increase of investigations in this area in 2020. 

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Don't forget to check out last week's top RIA compliance news articles that focus 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.  

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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