Top RIA Compliance News Articles for the Week of August 3, 2018

1. Nine Years Later: What’s Changed for Wirehouse Advisors (Author- Mindy Diamond, WealthManagement.com)

A lot has changed over the last 9 years relative to recruiting and how it feels to be an employee at a wirehouse. According to an article by Mindy Diamond, “with wirehouse advisor discontent at an all-time high” many advisors are considering a change. “For many of the advisors who changed firms in 2009, it was their first move. A first move is almost always met with positive feedback from clients—assuming the advisors consistently put clients first and acted in complete good faith. However, a subsequent move, even one separated from the first by almost a decade, can become a bit trickier due to the potential onset of “client fatigue.” Diamond discusses how advisors may overcome the fear clients might have of the, making a second move and how not settling for “status quo does not best serve clients.” 

2. Interesting Angles on the DOL’s Fiduciary Rule #100 (Author- Fred Reish, FredReish.com)

In his 100th article discussing the DOL fiduciary rule and the SEC’s “best interest” proposals, Reish continues the discussion from part I where he went in to detail about the “application of the SEC’s best interest standard to recommendations to participants to take distributions and rollover to IRAs. It also discussed the apparent requirement for a thoughtful and professional process to develop the recommendation.” In part II he talks about the actual factors considered in that process. 

3. A Proper Interpretation of the Investment Advisers Act’s Fiduciary Standard (Author- Ron Rhoades, Scholarly Financial Planner)

Department of Labor (“DOL”) Fiduciary Rule expert and Program Director for the Financial Planning Program at Western Kentucky University, Dr. Ron Rhoades, shared his comment letter to the SEC regarding their proposed interpretation of the fiduciary standards. In his letter Rhoades provides, “a more complete exploration of the investment adviser’s fiduciary duties, under state common law.” By doing so, he suggests some major “enhancements” to the SEC’s interpretation. To read his comment letter in it’s entirety, click here. 

4. FINRA Report Shows the Small Advisory Firm is in Jeopardy (Author- Michael Thrasher, WealthManagement.com)

According to a study complied by the Financial Industry Regulatory Authority (“FINRA”) and reported by Michael Thrasher, “the total number of FINRA-registered firms fell from 4,146 to 3,726 between 2013 and 2017, and small firms accounted for 410 of the 420 fewer businesses” On the other hand, “the growing number of registered investment advisory firms continued to keep pace with recent years. In 2008, there were 24,147 RIA-only firms and the total has grown steadily to 29,599 at the end of 2017.” Be sure to check out this article to see more details from this inaugural FINRA report for more key insights.

5. Allison Lee most likely choice for SEC commissioner, reports say (Author – Bloomberg News, Investment News)

According to industry insiders, Allison Lee, a former enforcement attorney at the SEC and aide to Commissioner Kara Stein, is the Trump administration’s likely choice for SEC Commissioner. According to an article in Investment News, “Picking a replacement for Ms. Stein, whose term expired last year, has caused a split among Democrats, with the party’s progressive wing pushing for someone seen as being willing to be tough on Wall Street.”

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