Congratulations! Your firm has successfully registered as a registered investment advisory (RIA) firm – a significant milestone in the financial industry. As a compliance professional, you play a crucial role in ensuring your RIA firm adheres to the regulatory framework, maintaining trust with clients and avoiding potential pitfalls.
This is your guide to everything you need to know about compliance as a newly registered RIA firm.
Ten tasks for you to complete at your newly registered RIA firm
Navigating the compliance landscape at a newly registered RIA firm can be tricky, but we have you covered. Now that your firm has successfully registered as an RIA firm, you should:
- Understand applicable regulations.
Before delving into the specifics of compliance, it’s essential to grasp the regulations your RIA firm will be expected to follow. RIAs are regulated by the Securities and Exchange Commission (SEC) or state securities authorities, depending on their assets under management (AUM). Familiarize yourself with the applicable regulations and regulatory bodies, as they form the foundation of your compliance efforts.
2. Develop a compliance program.
One of the first tasks for a compliance professional at a newly registered RIA firm is to create a robust compliance manual. This manual should outline the firm’s policies, procedures and controls to ensure compliance with federal and state regulations. Include specific guidance on areas such as portfolio management, advertising, recordkeeping and more.
3. Maintain accurate recordkeeping.
RIA firms must maintain accurate and complete records of their business operations, including client agreements, transactions and communications. Adequate recordkeeping not only supports compliance but also facilitates transparency and accountability. Make sure your firm has a robust system in place for record retention and retrieval.
4. Compliance training.
Education is key to maintaining compliance. Offering regular compliance training to your firm’s employees ensures they are aware of the latest regulatory changes and understand their responsibilities. Document these training sessions so you have a record of your firm’s commitment to compliance.
5. Form ADV and disclosure documents.
The Form ADV is a cornerstone of RIA compliance. It is both a registration document and a disclosure document that provides critical information about your firm’s services, fees, conflicts of interest and disciplinary history. Keep this document updated and ensure that it accurately reflects your firm’s operations.
6. Implement cybersecurity measures.
As technology plays an increasingly significant role in the financial industry, cybersecurity is a top concern. Safeguard client data and sensitive information by implementing robust cybersecurity measures, including encryption, firewalls and regular security assessments – to name a few of the top areas that your RIA firm’s cybersecurity program should address.
7. Advertising and marketing compliance.
Considering the recent enforcement actions, it’s crucial that your RIA firm is vigilant when it comes to advertising and marketing materials. Ensure that all promotional content adheres to regulatory guidelines, including accurate performance reporting, disclosure of fees and avoiding misleading statements.
8. Stay informed about regulatory changes.
Regulatory requirements constantly change. To stay compliant, it’s crucial to stay informed about regulatory changes. Subscribe to industry publications, attend compliance conferences and stay up to date on any announcements, releases or risk alerts put out by regulatory bodies.
9. Test your compliance program.
It’s essential to test your firm’s compliance program to identify and address potential issues before they become violations. Establish a routine for testing your firm’s adherence to policies and procedures. This includes reviewing client accounts, transaction records and employee activities to ensure everything aligns with regulatory requirements.
10. Conduct annual reviews.
As an RIA firm, your firm is required to conduct an annual compliance review. Use this opportunity to assess the effectiveness of your compliance efforts, identify areas for improvement, and update your policies and procedures accordingly.
As a compliance professional, your role is critical in ensuring your firm’s adherence to regulations. By implementing these tactics, you can protect your RIA firm’s reputation, increase clients’ trust and avoid violations.
Complying with COMPLY
Compliance is not just a box to check. It’s the foundation of your firm’s success and reputation – and COMPLY can help.
COMPLY offers tailored consulting and technology services to meet your firm’s specific needs. Regardless of your RIA firm’s complexity, risk profile or size, COMPLY offers services to help your firm identify and address compliance risks. By utilizing COMPLY’s solutions, your newly registered RIA firm can ensure it meets regulators’ expectations.
Haven’t registered your RIA firm, yet? We have you covered! At COMPLY, we offer an RIA registration solution that helps you through the process with ease.