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 March 26, 2016:
- DOL Fiduciary Rule Likely Coming Wednesday (Author- Melanie Waddell, ThinkAdvisor)
On Wednesday, April 6, The Wall Street Journal reports Sen. Elizabeth Warren, D-Mass., and Labor Secretary Thomas Perez will release the Department of Labor’s (DOL) final fiduciary rule. It is likely to be announced at the Center for American Progress in Washington. Prior to this announcement, the rule must first be released to the Federal Register, which will likely be on Tuesday. Finally, the new rule will likely be available for public review on the DOL’s website by Friday, April 8. Perez notes that he is looking forward to “explaining the changes we made and how we intend to proceed.”
- SEC Approves Finra Broker-Compensation Rule (Author- Mark Schoeff Jr., InvestmentNews)
The Financial Industry Regulatory Authority (FINRA) rule that is designed to encourage investors to ask their brokers about incentives they received to change firms has been approved by the Securities and Exchange Commission (SEC). This long-debated rule requires brokers switching firms to send an “educational communication” to clients that they are soliciting to transition to the new firm with them. The revised rule is said to be a less strict requirement for brokers than what was originally proposed nearly three years ago.
- Leverage Compliance for Greater Business Success (Author- Matthew Reynolds, Wealth Management)
Industry veteran, Matthew Reynonds, who currently serves as the Chief Operating and Compliance Officer for a large financial firm, makes the case that firm principals need “leverage their compliance staff to build a better business.” In particular, Reynolds argues that firms should 1) make compliance a business line, 2) motivate compliance to manage risk, 3) reconcile your compliance culture to reality, and 4) ask do you have the right person in the job? In our experience as RIA compliance consultants, we see many of the most innovative and best-run investment advisory firms implement much of what Reynolds argues for.
- Despite Industry Fears, DOL’s Fiduciary Rule is Just More of the Same (Author- Bruce Kelly, InvestmentNews)
Although some executives may be nervous about the upcoming fiduciary rule, author Bruce Kelly believes the industry is overreacting and that everyone should relax. In particular, Kelly argues that the industry is already moving aggressively towards a fiduciary world and this is just the latest step in the transformation. One fear investment advisors claim to have about the upcoming DOL rule is they will be forced to recommend the lowest-cost investment available for a client. Another concern is the implications of brokerage firms being required to use a fiduciary standard when investing client money on robo-advisor platforms. Kelly’s lighthearted take on this controversial rule is a great read.
- Senator Suggests Insurers Violated Law with Fiduciary Comments (Author- Ted Knutson, Financial Advisor)
On Thursday, four insurance companies were accused by U.S. Sen. Elizabeth Warren of potential securities law violations for making contradictory statements in regards to the DOL fiduciary rule, claiming it was both unworkable and workable. In a letter address to SEC Chairwoman Mary Jo White, Warren stated each of the four companies submitted comment letters to the DOL claiming the rule would “seriously harm” their companies and the broader retirement advice industry. On the other hand, Warren argues that the top executives at each company also made statements to investors noting that fiduciary rule would not overly burdensome.
Be sure to check back next Friday for next week’s top articles!