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 October 1, 2016:
- Steps Advisers Must Take to Avoid Email Cyberattacks (Author- Sheryl Rowling, InvestmentNews)
Email is one of the most common ways cyber criminals are hacking into computers with the goal in mind to make a person share secure information or falsely transfer funds. This can happen as easily as clicking on an unknown link or replying to the email. The possibility of a virus taking over a computer is another possible outcome. As Sheryl Rowling writes, making sure each email received is viewed carefully and cautiously is critical since the odds of cyberattacks rising at a rapid pace. Ultimately, we believe that information security is largely a “people training and education problem” as employees often pose the greatest IT security risk to RIA firms.
- SEC Waging Enforcement ‘War’ on Advisors: Giachetti (Author- Danielle Andrus, ThinkAdvisor)
Tom Giachetti, chairman at Stark & Stark, voices his opinion on how the term “fiduciary” is all anyone hears about currently and how important it is for advisors to take responsibility for all actions because he believes the Securities and Exchange Commission (SEC) is taking a more aggressive stance. In particular, Giachetti makes the claim that “the SEC and chairwoman Mary Jo White are by far the most aggressive he’s ever seen.” In this article, author Danielle Andrus shares Giachetti’s tips on some compliance areas he feels advisors must be extra careful with including how an RIA firm should always be ready for an exam at all times.
- Fiduciary Compliance Requires More Than a Tech ‘Band-aid’: Orion’s Clarke (Author- Emily Zulz, ThinkAdvisor)
Staff Reporter Emily Zulz brings us this article about the Founder and CEO of Orion Advisor Services, Eric Clarke, and his views on using technology to comply with the Department of Labor (DOL) fiduciary rule. In particular, Clark argues that advisors need to be careful not to “buy into the ‘propaganda’ about the DOL rule.” He goes on to add that “They’re saying ‘you need to buy this technology widget to comply with DOL, and we have the only one that does this’…I’m like, ‘I don’t even see how that widget complies with `the DOL rule`.'” Instead, Clarke believes that “advisors need to spend time with their chief compliance officers or compliance consultants to find out how the DOL rule really impacts their business specifically.” Check out this article to read in detail on Clarke’s opinions on using technology in relation to the DOL rule and Advicent sharing how they are slowly seeing clients change their business processes as a result of this rule.
- 5 Big Changes to Make Before Fiduciary Rule’s April Deadline: AssetMark (Author- Bernice Napach, ThinkAdvisor)
Advisors are currently working hard to get their business practices in order to comply with the Department of Labor’s (DOL) fiduciary rule. Advisors have until April 10, 2017 to comply with the new “impartial conduct standards.” Matt Matrisian, senior vice president of Strategic Initiatives at AssetMark, shares insight on questions for advisors to ask themselves to see how prepared they currently are for the new rule. Moving forward from this, he suggests five recommendations on where to start to make sure your firm is ready and on the path toward compliance. In particular, he advocates taking the following steps: segment clients, consider switching products to lower cost alternatives, focus on the value proposition, consider obtaining additional industry credentials, and ultimately “say goodbye to your old business model.”
- Advisors Can Define the New Fiduciary Advisor/Client-Centric Program (Author- Knut A. Rostad, ThinkAdvisor)
Knut A. Rostad, President of the Institute for the Fiduciary Standard, shares that the Institute recently announced the launch of the Best Practices Fiduciary Advisor Affirmation Program which is “designed to fill a gap in federal regulatory compliance and advisor group codes of conduct—a gap that has left too many investors receiving questionable product recommendations under the guise of fiduciary advice.” Furthermore, Rostad lists twelve “Best Practices” in regards to how advisors should be conducting business starting with “put into writing that fiduciary duties apply at all times – not just sometimes.”
Don’t forget to check out last week’s top RIA compliance news articles on third party investment adviser audits and why more advisors are choosing to start their own RIA firm. Be sure to check back next Friday for next week’s top articles!