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. This week’s recap focuses on cybersecurity, compliance as the most important back office consideration, and technology selection. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of March 15th, 2019:
1. Cybersecurity concerns over messaging apps grow as more firms enable adviser texting (Author- Ryan W. Neal, InvestmentNews)
Instant messaging and mobile chat platforms are continuing to become a popular method of communication within the financial services industry. With this growing demand for instant messaging platforms comes an increased concern around cybersecurity threats that these apps pose to advisory firms. “According to StarLeaf, which sells an instant messaging and conferencing product, these apps can undermine network security, open financial services organizations up to data breaches and provide a point of entry for malicious hackers,” Ryan Neal writes. Although introducing instant messaging may add another layer of compliance and cybersecurity challenges, advisors are continuing to seek platforms that allow them to contact their clients in a secure, compliant manner while minimizing the possibility for human error.
2. Compliance- Not Cost- is Most important to Planning Back Office (Author- Diana Britton, WealthManagement)
According to a recent survey conducted by FTJ FundChoice and WealthManagement.com, the top consideration of firms when building their back offices was not the cost, but compliance. According to Diana Britton, “Nearly 80 percent of respondents indicated that meeting compliance requirements was the top consideration when building a back-office infrastructure.” Efficiency and ease-of-use were other considerations.
3. Content is King, But Compliance is Critical (Author – AlexAnndra Ontra, WealthManagement)
AlexAnndra Ontra offers presentation management practices that your firm can implement to avoid running into regulatory deficiencies and maintain compliance with the content that your firm shares with its prospects or clients. These practices include storing content in a central location, controlling permissions to accessing content, tagging content with corresponding disclosures, and making sure all types of content are being updated. Ontra states, “By putting a presentation management strategy into action, your organization will mitigate the risk of the crucial information getting out while streamlining the entire process – from creation, to sharing, presenting and updating.”
4. Succession plan succession story (Author- Jeff Benjamin, InvestmentNews)
Jeff Benjamin tells the story of Benjamin Tobias and his succession plan success story of his firm, Tobias Financial Advisors. Tobias had been prepping two advisers at his firm to take over the business in the future, however, unexpectedly in 2016 Tobias became a 24/7 caregiver to his wife battling cancer and had to move up his succession plan sooner than originally planned. Mr. Saneholtz and Ms. Callado took over the firm without missing a beat, and are successfully running the firm maintaining Tobias’ strong brand while implementing their own fresh ideas. Tobias’ story reemphasizes the importance of having a formal succession plan in place at your advisory firm.
5. Starting a new advisory firm: Selecting technology (Author- Scott Hanson, InvestmentNews)
Scott Hanson, CEO of Hanson McCain, guides you through how to prioritize your technology selection when starting a new advisory firm. At the top of the list is a CRM system, followed by a transcription service, portfolio accounting management system, communication systems, and marketing technology. Hansen shares his success at Hanson McClain and credits much of its growth to its technology stack. “But if you’re just starting out and cost containment is key, the standard for determining the value of a technology should be that it affordably helps you increase efficiency and profit (and doesn’t take on a life of its own),” Hanson states.
Don’t forget to check out last week’s top RIA compliance news articles on senior clients, robo advisors, mutual fund share class regulatory issues, and cybersecurity. Be sure to check back next Friday for next week’s top articles!
RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.