Top RIA Compliance News Articles for the Week of March 25, 2017

1. How the DOL Rule Postponement is a Blessing For RIAs That ‘Took Their Foot Off the Gas’–And Why Vanguard Sees Such Delays as a Creeping Menace (Author- Brooke Southhall, RIABiz)

RIABiz’s Brooke Southall reports, “The Department of Labor’s fiduciary rule will not–finally and definitively–be enforceable as of April 10, but will be as of June 9, a full year after it became effective.” According to Southall, few seem opposed to the extra time given for the rule to go into effect. The DOL submitted its final rule to the Office of Management and Budget for review this past Tuesday. In regards to how the rule could impact RIA firms, Jason Roberts, CEO of Pension Resource Institute, LLC states, “There are just more conflicts than we originally imagined. Once you start applying the rules to the various arrangements RIAs have with IRA clients and third parties, there are a number conflicts, or in DOL terms, prohibited transactions that must be deconstructed and/or fit within an exemption.”

2. Red Flags For Prospective Breakaways (Author- Charles Paikert, Financial Planning)

The number of brokers breaking away from their wirehouses to go independent is steadily increasing. However, despite all the benefits of going independent, advisers need to be cautious before making the move according to industry executives speaking at a recent roundtable forum. CEO of integrated platform provider Dynasty Financial Partners, Shirl Penney, claims wirehouse brokers can be “naïve” when it comes to starting their own RIA. According to Jon Beatty, SVP, sales and relationship management for Schwab Advisor Services, “the rapid growth of the independent channel has meant an explosion of opportunity for advisers.” Check out Charles Paikert’s Financial Planning article to read more insights from the event.

3. Senate Panel Approves DOL Nominee By Narrow Vote (Author- Allison Bell, Think Advisor)

Allison Bell, Insurance Editor at Think Advisor, brings us this article on the Senate panel approving the current DOL Secretary nominee. Bell writes, “Members of the Senate Health, Education, Labor and Pensions Committee today voted 12-11 to support the nomination of R. Alexander Acosta to be the next secretary of Labor.” Acosta, who has a bachelor’s degree and law degree from Harvard, has been the dean of the Florida International University law school since 2009. His background also includes working for the Department of Justice and being the U.S. attorney for the Southern District of Florida. It is widely anticipated that his nomination will be confirmed by the Senate.

4. FINRA Gets Green Light from SEC on Rules to Protect Seniors (Author- Margarida Correia, Financial Planning)

On February 5, 2018, a new FINRA rule impacting broker dealer firms will go into effect which is aimed at helping firms protect seniors against financial abuse. Financial Planning’s Margarida Correia reports, “under FINRA’s new rules, firms will be required to make reasonable efforts to obtain the name and contact information for a trusted person for retail customer accounts. Firms will also be permitted to place a temporary hold on disbursements of funds when there is reasonable belief of financial exploitation.” FINRA CEO, Robert Cook, believes “these rules will provide firms with tools to respond more quickly and effectively to protect seniors from financial exploitation.” While FINRA does not regulate RIA firms, investment advisory firms should anticipate similar rule-making to follow in the coming months and years.

5. The FIduciary Standard: What Would Peter Drucker Say? (Author- Knut A. Rostad, Think Advisor)

Vanguard founder Jack Bogle and personal finance columnist and author Jane Bryant Quinn joined the Institute for the Fiduciary Standard last week for a briefing in New York. At the briefing, the Institute announced the first class of 27 Best Practices Advisors. President of the Institute, Knut A. Rostad, composed this article for Think Advisor where he voices his opinions on The Best Practices Professional Conduct Standards. The conduct standards begin with a statement that reads, “Affirm the fiduciary standard under the Advisers Act of 1940, common law and, if applicable, ERISA and DOL’s COI Rule, govern all professional advisory client relationships all times.” Rostad also opines on his view that while some in the industry may view disclaimers as acceptable as it related to fiduciary duty, he believes there is a better approach.

Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule and cybersecurity. Be sure to check back next Friday for next week’s top articles!