Top RIA Compliance News Articles for the Week of July 16th, 2021

     1. SEC Finds Wrap-Fee Failures in Advisor Exams (Author – Melanie Waddell, Think Advisor)

Following this week’s newly released SEC risk alert on wrap fee programs, Melanie Waddell summarizes the key points of the warning to advisors. Waddell shares that the SEC’s Division of Examinations prioritized the exams of advisers associated with wrap fee programs as part of its focus on market wide risks and issues affecting investors. The common deficiencies found during these exams include weak or ineffective compliance programs, inadequate disclosures for conflicts, fees, and expenses, and insufficient assessments that the wrap fee programs were in the clients’ best interests.

     2. Peirce’s concerns about ESG rulemaking could split SEC (Author – Mark Schoeff Jr., InvestmentNews)

This week, SEC Commissioner Hester Peirce expressed her concerns over the rulemaking on mandatory disclosures for environmental, social, and governance, “ESG” issues. Peirce presented 10 “theses” to explain “real-life uncertainties and complications” of ESG rulemaking and recommended that the SEC evaluate how the current ESG disclosure requirements could be updated as guidance instead. The article concludes by suggesting the political debate on ESG regulations will continue and the SEC will not lose its momentum of working towards getting more clarity around company ESG disclosures.

   3. SEC’s Gensler issues warning about stock tokens (Author – Bloomberg News, InvestmentNews)

This article, originally from Bloomberg News discusses SEC Chairman Gary Gensler’s warning that synthetic stocks known as tokens which are sold to U.S. investors will be covered by the securities laws. Specifically, he mentions using the SEC’s enforcement resources to go after unregistered tokens that mirror the performance of companies like Amazon and Tesla. Gensler has repeatedly expressed his concerns over cryptocurrency regulation and is urging lawmakers to pass proper legislation to give the SEC authority to police the digital trading venues.

    4. As in-person conferences restart, attendees want one thing above all else (Author – Jeff Benjamin, InvestmentNews)

With the return of in-person conferences, sponsors and exhibitors may need to update their strategies to gain interest from attendees. Findings from a recent survey of 560 financial advisers show that attendees have more interest in small gatherings such as dinners with featured speakers, off-site events, and “interesting giveaways.” The data also proved that virtual events which can be viewed at a person’s leisure were most popular. Another conclusion drawn from the study is that sales presentations were not among the most favored method, but as a supplement to the conference experience.

     5.The Future Is Now (Author – Eric Rasmussen, Financial Advisor)

Eric Rasmussen discusses how the pandemic has shaped how RIA firms do business today. Firms are more open than ever before to hiring remote workers if the person’s skillset and compensation requirements are right. Digital meeting technology has made a tremendous impact on firms, enhancing the flexibility for advisers to communicate with their clients. The article points out a commonality, with RIA firms able to maintain their business development goals with their entire staff working remotely. On the other hand, larger RIA firms are directing staff to return to the office to better track productivity. An industry expert involved in mergers and acquisitions of RIA firms claims that firms’ valuations are higher than they have ever been, and that M&A activity is on the rise.

Don’t forget to check out last week’s top RIA compliance news articles that focus on a shift in adviser fee structures, a call for the Securities and Exchange Commission (“SEC”) to evolve its regulation with the increase of technology use, environmental, social, and governance (“ESG”) regulation.