According to COMPLY Chief Regulatory Officer John Gebauer, financial advisory firms can expect between 5 – 10 new rules to pass this year alone – some with the same level of impact as the SEC’s Marketing Rule.
What does that mean for your RIA firm?
The time to prepare and evolve your program is now. While not every proposed rule will be adopted in its entirety, it is important for firms to understand how rules and regulations could impact the future of their firm and business operations, identifying areas within their firm which may need to be adjusted in order to maintain compliance.
And the first step to evolving your firm’s compliance program? Understanding which rules will impact your firm.
Five new SEC rules: The level of impact for your RIA firm
COMPLY’s inaugural Regulation Rundown highlights proposed and adopted rules from financial service authorities such as the SEC, FINRA, DOL and NASAA. COMPLY experts analyzed regulations from each of the governing bodies to assess what we believe to be the level of impact should these regulations come to pass.
Outsourcing by Investment Advisers
This rule would require advisers to more thoroughly vet and supervise vendors used by the firm for any function to be outsourced. It also contains requirements for certain contract provisions, which could lead to renegotiation of terms for many vendors used by advisers.
Level of impact: 5
Safeguarding Advisory Client Assets
This proposed rule represents a major shift in the definition and application of custody. The definition will be broadened to include discretion as well as expanded beyond funds and securities to “assets.”
Level of impact: 5
Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information
The Reg S-P update brings the rule more into alignment with GLBA and also imposes specific reporting and notification requirements for privacy breach incidents.
Level of impact: 4
Exemption for Certain Investment Advisers Operating Through the Internet
This rule is important because it tightens the existing exemption from the prohibition to registration with the SEC to apply only to those advisers providing advice through an operational website or app. It removes the current exemption’s provision for the IA to work directly with a nominal amount of clients.
Level of impact: 5
Many firms are using some type of predictive data analytics or AI as a regular part of their operations. This proposal is important because there is a concern that these predictive data analytical systems may favor registrants over investors.
Level of impact: 5
Learn more about the proposed and adopted rules coming from the SEC, FINRA, DOL and NASAA in COMPLY’s 2023 Regulation Rundown.