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 February 13, 2016:
- SEC to Add RIA Examiners Throughout 2016: Chief White (Author- Melanie Waddell, ThinkAdvisor)
Earlier this week, Securities and Exchange Commission (SEC) Chief, Mary Jo White, informed reporters at the annual Practising Law Institutes’s SEC Speaks conference that 102 RIA and investment company-focused examiners would be hired as part of President Barack Obama’s 2017 budget. This comes in addition to the 100 examiners currently at the agency that are being shifted from broker dealer to investment adviser exams. As Melanie Waddell reports, it’s evident that the SEC is taking more action that it has in the recent past to increase the frequency of investment adviser audits.
- I Take Issues With the Entire Concept of Using “Risk Tolerance” to Determine Asset Allocation (Author- Ron Rhoades, Scholarly Financial Planner)
Ron Rhoades explains his opinion on the idea that a risk tolerance questionnaire should not be the sole resource used to determine an investor’s asset allocation. He believes it does not take into consideration an investor’s need to take on risk. According to Rhoades, an asset allocation is one of the most important decisions an investor will make and the advisor needs to exercise great caution and care to ensure that the investor is properly allocated. Check out this blog post to read more on why Rhoades believes it is time to “push back on the use of risk tolerance questionnaires, alone, to determine (or even suggest) strategic asset allocations.”
- Not Just the DOL: Retirement Plan Advisers Must Prepare for Increased SEC Scrutiny (Author- Blaine F. Aikin, InvestmentNews)
Aikin notes that the SEC Office of Compliance Inspections and Examinations (OCIE) through its Retirement-Targeted Industry Reviews and Examinations Initiative (ReTIRE) and the Department of Labor (DOL) are both putting more focus on investment advisers that manage retirement assets. In particular, he writes that there appears to be more coordination across regulatory agencies in the area of rollover advice. To conclude, Aikin suggests that advisers should be focused not only on mitigating conflicts of interest, but instead avoiding such conflicts when possible.
- Ten Experts Weigh in on Cyber Liability Insurance (Author- David H. Lenok, WealthManagement)
Increasingly, RIA firms along with firms across all industries are looking into the purchase of cyber liability insurance to help offset some of the potential risks related to cybersecurity. Recently, SecurityCurrent.com asked chief information security officers about their thoughts on such insurance policies. Given that many RIA firms are now exploring these policies in addition to their standard errors and ommissions insurance, this is a great recap.
- SEC Nominations Could Stall Amid Partisan Warfare Over Supreme Court (Author- Mark Schoeff Jr., InvestmentNews)
With the death of Justice Antonin Scalia, Schoeff Jr. reports that the partisan battle in the Senate that may soon ensue in the Senate may also lead to a long delay on filling the two vacant SEC Commissioner seats. In the meantime, the SEC will be forced to operate with just three members: Chairwoman Mary Jo White, Democrat Kara Stein, and Republican Michael Piwowar. Given the vacancies, there is speculation that the SEC may stall on any upcoming controversial votes.
Be sure to check back next Friday for next week’s top articles!