Top RIA Compliance News Articles for the Week of September 7, 2018

1. Hurricane Florence will test limits of adviser contingency plans (Author- Jeff Benjamin, InvestmentNews)

With Hurricane Florence hitting the Carolina coast this week, many advisors had to put their business continuity plans into motion. According to a recent article by Jeff Benjamin, “Cloud-based data storage and disaster recovery systems are part of the response to the increased regulatory focus on business continuity plans that gained traction after Hurricane Harvey hit Texas last year.” In Benjamin’s article, Jason Carroll, chief executive of Live Oak Private Wealth of Wilmington N.C., said, “we started our disaster preparedness a week ago, and now we’re all up and working.” Mr. Carroll also stated, “that client data are safe and clients can still access their accounts and conduct business with financial representatives.” 

2. How this advisor is facing down Hurricane Florence (Author- Nina O’Neal, FinancialPlanning.com)

Nina O’Neal, an investment advisor and partner at Archer Investment Management in Raleigh, North Carolina said, “I underestimated Hurricane Matthew. It’s not a mistake I’ll make again with Hurricane Florence.” What does being prepared even mean? According to O’Neal, here are a few measures she put in place to ensure her firm was ready for Florence: the firm’s systems are cloud based, including their phones; a written communication was prepared for all clients about their disaster recovery plan and what to expect as far as their expected availability; and they verified their building security during and after the storm. To read more about how Nina O’Neal prepared her firm for Hurricane Florence, click here.   

3. Individual Investors Mystified By SEC’s Best-Interest Disclosures, Study Finds (Author- Tracey Longo, ThinkAdvisor)

As reported by Tracey Longo, “Research unveiled Wednesday by four advisor and consumer groups found that the SEC’s proposed Regulation Best-Interest disclosures not only confuse investors, but also give them a false sense of confidence that their investment professional will make their money grow.” According to the AARP, “we believe the results of this testing clearly indicate the need for the `SEC` to revise and retest the content language and format of the forms.” According to the study, “few participants could define the term fiduciary and few knew what the specific obligation would be,” said Susan Kleinman. To read more about the findings from the study, click here.

4. 3 Top Succession Strategies for Advisors: Which One’s Right for You? (Author- Robert Goff, ThinkAdvisor)

It is never too early to develop a plan to ensure your business and clients are set up to carry on in the event you decide to exit your business. According to Robert Goff, “planning starts with an understanding of succession strategies and determining which one best fits your practice and time horizon. The first step in developing a succession plan is choosing the right strategy.” Goff continues by outlining three strategies: developing a long-term succession plan with an internal successor; merging with another advisor; and selling outright. He further explains the pros and cons of each strategy, giving advisors a good picture of which strategy might work best for their firm.

5. SEC rescinds guidance that bolstered proxy advisers (Author – Peter Schroeder, Reuters)

According to Pete Schroeder’s recent article in Reuters, “The U.S. Securities and Exchange Commission handed public companies a procedural victory on Thursday in their efforts to reduce the influence of proxy advisory firms, rescinding a pair of staff letters that critics said encouraged mutual funds to rely on their recommendations.” This move by the SEC to rescind a couple 14 year-old staff letters, “could be an indication the agency is considering a broader overhaul of corporate governance rules.” The article goes on to say, “the decision was hailed by the business lobby. Groups like the U.S. Chamber of Commerce have long complained that two proxy advisory firms, Institutional Shareholder Services and Glass Lewis & Co, dominate the industry with insufficient oversight.” 

Don’t forget to check out last week’s top RIA compliance news articles on cybersecurity, a newly confirmed SEC commissioner, and the industry’s thoughts around potential CE requirements for investment advisers. Be sure to check back next Friday for next week’s top articles!