Each Friday, 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 COMPLY’s new Chief Marketing Officer (CMO)., how financial planners make remote life work, the evolution of RIA consolidation, relying on client referrals and how financial services companies can prepare for and comply with new federal cybersecurity requirements.
Here are our top investment adviser compliance articles for the week of May 26, 2023:
COMPLY Hires Veteran Tech Marketing Executive As CMO (Author – Michael Madden, Wealth Solutions Report)
Regtech company COMPLY has appointed Gayle Nixon as its CMO. Nixon brings more than 15 years of experience in B2B marketing, marketing technology, growth-based strategies and team leadership. Previously, she served as the Senior VP of Marketing at legal technology service provider Litera. The CEO of COMPLY, Amy Kadomatsu, believes that Nixon’s expertise will solidify COMPLY’s position as a leading provider of compliance software, consulting and education resources for the financial services sector.
RIA Edge: Shirl Penney Predicts the Future (Author – Ali Hibbs, Wealth Management)
According to Shirl Penney, the founder of Dynasty Financial Partners, the next five years will be the greatest time in the history of the Registered Investment Advisor (RIA) industry. Penney identified five trends that will shape the RIA industry during this period.
1. Client demand
2. Dealmaking
3. Technology
4. Product innovation
5. Opportunity for independent advisers
“Penney predicted that client demand will drive more assets to the space; dealmaking will continue and surprising partnership opportunities will arise; technology will make advisors more effective and responsive; product innovation will continue to accelerate as providers focus on the independent sector; and it will be the “greatest time” in the history of the industry to be in the RIA game.”
The Evolution of RIA Consolidation Starts to Favor Buyers (Author – Jeff Benjamin, Investment News)
Consolidation in the wealth management industry continues, although it is evolving in interesting ways, according to a report by Fidelity Investments. In April, there were 14 registered investment adviser (RIA) deals announced, totaling $11.4 billion in client assets. While this is a decrease from the previous year, which saw 22 deals and $33 billion in April 2022, and 22 deals and $43 billion in March 2023 (with the latter heavily influenced by the sale of Silicon Valley Bank with $15.9 billion in client assets), it reflects changing market dynamics.
Kitces: ‘Growthiest’ Firms Rely the Least on Referrals (Author – Patrick Donachie, WealthManagement.com)
According to Michael Kitces, co-founder of XYPN, the most successful wealth management firms rely less on client referrals for growth. These firms generate a significant portion of their new client revenue through other marketing strategies. Kitces argues that as advisers become more expensive and their time becomes more valuable, it is inefficient to rely on them as marketers for the firm. Instead, he suggests allocating a portion of adviser compensation to the firm’s marketing efforts.
How Financial Services Companies Can Prepare for and Comply with New Federal Cybersecurity Requirements (Author – Morgan Lewis, JDSUPRA)
US regulators have increased their focus on cybersecurity issues impacting financial services companies, with a host of guidance documents recently released by the US Securities and Exchange Commission (SEC), the three federal banking agencies—the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency—and the US Department of Labor (DOL). Often targeted for its data and money, the rapid digitalization of the financial sector has led to an increase in global cyber threats.
Don’t forget to check out last week’s top RIA compliance news articles recapping on why RIAs are embracing compliance, crafting an annual compliance calendar, a new fiduciary rule and more.