In 2015, members of the North American Securities Administration Association (NASAA) performed coordinated state exams in which examiners uncovered the top registered investment adviser (RIA) compliance deficiencies in 42 jurisdictions. In total, 1,170 examinations were conducted and 4,983 deficiencies were reported. Over the past year, we have released 14 blog posts probing each of the top RIA regulatory compliance deficiency categories highlighted in the most recent biennial report.
We’ve broken down the details on the top 10 types of regulatory compliance deficiencies outlined in the 2015 NASAA RIA Coordinated Examination Report. Below are the links to our summary overviews for each top deficiency category:
- Books & Records: 74.8%
- Contracts: 49.5%
- Registration: 41.5%
- Privacy: 21.5%
- Fees: 21.2%
- Custody: 20.1%
- Advertising: 18.8%
- Brochure Delivery: 16.7%
- Supervision: 16.0%
- Financial Matters: 11.9%
In addition, NASAA also provides additional detail on the frequency of compliance deficiencies for certain categories of investment advisory such as firms managing a pooled investment vehicle or acting as a solicitor. Below are the links to additional summary overviews for each of these specialized deficiency categories:
- Pooled Investments: 23.7% (of firms managing pooled investment vehicles)
- Acting as a Solicitor: 5.7% (of firms acting as a solicitor)
- Paying Solicitors for Referrals: 15.0% (of firms that utilize solicitors)
- Financial Planning: 9.1% (of firms that offer financial planning services)
As RIA compliance consultants, we continue to emphasize the importance of the Chief Compliance Officer (CCO) of each RIA firm taking the time to review the details of this biennial report from NASAA. This report consistently contains a wealth of compliance information to help a CCO to modify and improve a firm’s compliance program to ensure top problem areas are being properly addressed. Be sure to look out for the next summary report which is likely to be released in September 2017.