Each week we’re 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. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of August 27, 2016:
- SEC Increases Amount of Data Advisors Must Include on Form ADV (Author- Melanie Waddell, ThinkAdvisor)
This past week, new rules were adopted by the Securities and Exchange Commission (SEC) requiring advisors to provide more data on separate managed accounts, branch office operations, and social media accounts on the Form ADV. The agency reported examiners can use this information to help evaluate advisor performance claims and could reduce the risk of misleading communication by advisors. According to Mary Jo White, this rule will “provide investors and the Commission with a better understanding of the risk profile of each advisor and the industry as a whole.” As for social media, advisory firms will be required to list on Form ADV their public social media accounts the company is in charge of running, not the personal social media accounts of employees. These new rules will take effect on October 1, 2017.
- Will Advisors Turn to Tech for DOL Compliance? (Author- Ryan Neal, Wealth Management)
As advisors look to implement changes in order to comply with the new Department of Labor (DOL) fiduciary rule, a recent study by WealthManagement.com and Advicent looked at what role technology may play in helping firms comply with the new rule. However, after reviewing the survey results of almost 600 advisors, Ryan Neal notes that “the demand for wealthtech may not be there…only a quarter of the advisors surveyed said they would need to bring in more technology.” However, risk tolerance and client profiling were two types of technology systems most commonly cited as necessary tools. Be sure to review the full overview of this interesting study.
- Advisor: Does Your Firm Have Investment Discretion? (Author- Chris Stanley, ThinkAdvisor)
In this latest article, Chris Stanley addresses a question many advisors may wonder about: “how do I know if my firm has investment discretion?” He provides the Form ADV Glossary definition as well as a definition that can be found in Section 3(a)(35) of the Securities Exchange Act of 1934, however Stanley goes on to elaborate on the topic in much greater detail. One such observation is that “if an advisor has the authority to recommend various transactions or third-party advisors, and the client is required to consent to such recommendations before they are acted upon, the advisor does not have investment discretion.” If an advisor is considered to be discretionary or not, it may also affect how it calculates its regulatory assets under management (RAUM) and the application of the new “Level Fee Exemption” in regards to the DOL fiduciary rule. Stanley stresses investment discretion should not be taken lightly and knowing if your firm has it is something important to determine.
- SEC Hot-Button Topics That Advisers Need to Know About (Author- John Waggoner, InvestmentNews)
SEC regulatory focus ares are always top of mind for RIA firms. Have you ever wondered what’s on top of the SEC’s minds currently? According to John Waggoner, some of these priorities include: business continuity planning, cybersecurity, fee disclosure, issues of pricing illiquid assets, and monitoring advertising claims (particularly assets under management). Check out this article to learn more.
- Insurance That Advisers Will Need to Cover New Fiduciary Duties (Author- Daniel Healy, InvestmentNews)
As the DOL looks to expand its definition of a fiduciary, advisers new to the fiduciary role may need to ensure that they have proper insurance coverage for potential liabilities. As Daniel Healy notes, policyholders should review coverage language to be sure it aligns with the types of services a fiduciary provides and there are no exclusions that could negatively impact the firm or its advisors. Be sure to check out this piece for lots of insightful tips on how to evaluate potential insurance coverage.
Don’t forget to check out last week’s top RIA compliance news articles focused exclusively on the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!