What’s the latest news in the world of regulatory compliance? Welcome to our biweekly recap, where we are giving you our 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. Today’s recap focuses on finfluencers, growth in the RIA industry, the SEC agenda, implications of a proposed AML rule, and the impact of regulatory change on ETFs.
Here are our top investment adviser compliance articles as of February 23, 2024:
What the industry can learn from ‘finfluencers’ (Author – Tobias Salinger, Financial Planning)
A new report by the CFA Institute explores the rise of “finfluencers” on social media, offering guidance to young investors often overlooked by traditional wealth management. While these influencers provide valuable advice, they may also run afoul of advertising and securities laws. The report underscores the challenges and opportunities presented by this trend, urging greater disclosure and regulatory oversight to protect investors. Despite concerns, the popularity of finfluencers highlights a growing interest in financial literacy among younger generations.
Industry groups warn money laundering rules could impose staggering burden (Author – Dan Shaw, Financial Planning)
The U.S. Treasury Department’s proposal to extend anti-money laundering laws to advisers could result in an average of 60 suspicious activity reports annually per firm. This would affect over 15,000 advisory firms, imposing new recordkeeping and reporting requirements for detecting suspicious client activities. Concerns arise over the burden on small firms and the potential duplication of existing regulations. While some welcome the proposed uniformity, others stress the need for tailored regulations and express worries about resource constraints.
The proposal is open for public comment until April 15.
RIAs are growing rapidly but not equally. Here’s why (Author – Tobias Salinger, Financial Planning)
The growth of registered investment advisory firms (RIAs) is accelerating, with financial adviser headcounts and client-focused firms surging in 2022. However, fragmentation poses challenges, favoring larger RIAs in navigating expansions. Despite increasing autonomy sought by advisers, concerns over compliance and operational support persist, underscoring the need for strategic planning amid competitive pressures and evolving market dynamics. Technology plays a crucial role in facilitating RIA launches and operations.
Gensler Vows to Advance SEC’s Rule Agenda as Election Looms (Authors – Lydia Beyoud, Katherine Doherty and David Westin, ThinkAdvisor)
SEC Chair Gary Gensler asserts that the U.S. Securities and Exchange Commission won’t accelerate its agenda due to potential political changes. Despite finalizing numerous rules under the Biden administration, approximately 20 regulations remain, facing opposition from conservative Republicans. Gensler emphasizes the importance of thoroughness over speed. However, potential repeal risks are noted if regulations aren’t completed before possible Republican gains in November. The SEC faces legal challenges over finalized rules, including those related to hedge funds and climate disclosures.
Regulatory change could bring ‘thousands’ of new ETFs (Author – Bloomberg News, Investment News)
Last week, during a major ETF conference in Miami, insiders focused on regulatory approval for new share-class structures, potentially revolutionizing the $8.4 trillion business. This model, pioneered by Vanguard, could bring tax efficiency to mutual funds, with heavyweights like Fidelity and Morgan Stanley seeking SEC permission. Approval could usher in a wave of thousands of new ETF offerings.
Check out our previous round-up, which focused on industry appeals to the SEC, the evolution of M&A, the DOL proposal, and crypto enforcement.