RIA Compliance and Practice Management Blog

Utilizing RIA Compliance Technology to Assist with Compliance Requirements

Posted by RIA in a Box

May 17, 2014 11:19:53 AM

This past week, Investment News released a great registered investment adviser (RIA) compliance piece titled 7 Ways to Correct Advisers' Biggest Technology and Compliance Blunders. The article is a highly recommended quick read as it includes a number of valuable investment advisory firm compliance tips. As RIA compliance consultants, here are our quick thoughts on the seven items outlined in the piece:

  1. Store data in secure places: Whether it be in the cloud, on your firm's server, or in paper files, it is essential that investment advisory firms properly secure sensitive client information. In 2013, the North American Securities Administrators Association (NASAA) report on investment adviser examinations advised all investment advisers as its #1 suggested best RIA compliance practice to back-up electronic data and protect records. This is an area that has and will continue to always draw great regulator attention. We generally recommend that investment advisers utilize secure cloud storage services when possible given the operational efficiency, back up capabilities, and likely cost savings.
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  2. Have a secure document management system: As the SEC recently highlighted in its cybersecurity compliance risk alert, investment advisers need to continue to improve how they are securely storing and managing documents. There needs to be an audit trail and a clear record of who at your firm accessed the document, etc. 
  3. Use systems to their fullest potential: As we discuss in our recent RIA Systems and Operational Best Practices White Paper, there is no more powerful tool for an advisory firm than a well utilized and integrated customer relationship management (CRM) system. While Microsoft Outlook serves as an excellent email management tool, it should not be mistaken for a professional CRM solution. Advisor-focused providers such as Redtail and Junxure remain the industry’ most established providers of cloud-based financial advisor CRM services, and are continuously adding integrations with advisory-specific software solutions. Salesforce, a popular cloud-based CRM service, has also been quietly increasing its presence in the investment advisory industry by providing a wide array of seamless integrations with third-party software solutions from a multitude of providers.
  4. Keep up with the latest advancements: As Joel Bruckenstein thoughtfully highlights in the Investment News article, investment advisory firms need to be proactive when it comes to evaluating technology. As we also touch upon in our RIA Democratization piece, the array of technology options available today to RIA firms is impressive and ever expanding. Many investment advisers struggle to stay on top of the latest financial advisory technology trends. Two great industry-specific technology resources for advisers to check out are Joel's Technology Tools for Today newsletter and Bill Winterberg's FPPad Bits and Bytes.
  5. Use a proper archiving tool or website design: As Bill Winterberg notes, many RIA firms do not realize that if advisers are texting with clients, those text messages must be properly archived just like email correspondence. Regardless if firms are texting with clients or not, it is crucial that the firm is properly archiving all correspondence with clients. There are a number of good archiving vendors who cater to the investment adviser industry including Smarsh.
  6. Understand social media's reach: A Twitter or LinkedIn post should be treated no differently than any piece of advertising. The SEC did recently issue RIA compliance guidance on social media usage and testimonialsbut social media compliance is still very much an evolving topic. As such, it's crucial that the Chief Compliance Officer (CCO) of the advisory firm continue to establish and enforce the proper policies and procedures when it comes to social media usage at the firm. At the end of the day, just like any piece of advertising, a social media posting should not be misleading or omit a material fact in any which way.
  7. Get a large enough bandwidth: As RIA firms continue to migrate to more cloud-based technology systems, ensuring that the office is equipped with a fast enough internet connection becomes even more important. And when it comes to investment adviser compliance, it's also important that the firm's business continuity plan also takes into account the internet-access capabilities of any alternative or back-up locations or even the scenario in which the internet is broadly inaccessible in a local area due to an unexpected event.

As RIA compliance consultants, we can not emphasize enough that technology can be an investment advisory firm's best friend when it comes to meeting its investment adviser compliance regulatory obligations. Not only are firms that adopt technology often more profitable and faster-growing, but they also tend to more efficiently manage various compliance responsibilities.

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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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