Top RIA Compliance News Articles for the Week of August 17, 2018

1. DOL fiduciary rule might be dead, but its ghost hovers over the financial advice industry (Author- Editorial, InvestmentNews)

Although the DOL fiduciary rule was overturned by the 5th Circuit Court of Appeals earlier this year, financial firms that moved to prepare for its full implementation must still follow their newly adopted policies and procedures until they take the initiative to fully reverse them. According to a recent editorial in InvestmentNews, “a number of firms took action to comply with the fiduciary rule and the best-interest-contract exemption so they could accept non-fee-based compensation. If firms decide to keep their new policies, they must make sure their staffs are fully trained on which practices are now acceptable and meet fiduciary standards, and which practices breach such standards.”

2. SEC’s Clayton Says Sales Contests Must Die (Author- Melanie Waddell, ThinkAdvisor)

According to a recent article by Melanie Waddell, “Securities and Exchange Commission (“SEC”) Chairman Jay Clayton said Wednesday that ‘questionable practices’ such as product-based sales contests should be eliminated. In a statement regarding the feedback the SEC has received during investor roundtables on a package of rules intended to ensure brokers and advisors act in clients’ best interest, Clayton listed the themes that he said ‘resonated’ with him.” According to the article, Jay Clayton stated that “Main Street investors have no tolerance for certain questionable sales practices such as high-pressure, product-based sales contests. In these circumstances, I do not believe it is possible for an investment professional to say with credibility that the investment professional is not putting his or her own interests ahead of the interests of the customer.” 

3. SEC Quashes More Bitcoin ETF Pitches in Another Blow to Crypto (Author- David Scheer, WealthManagement.com)

David Scheer states in a recent post, “The U.S. Securities and Exchange Commission rejected another round of attempts to list exchange-traded funds backed by Bitcoin, blocking ETFs from ProShares, GraniteShares and Direxion on concern prices could be vulnerable to manipulation.” In addition to their recent rejection, the SEC has already “denied a request to list a Bitcoin ETF run by twins Cameron and Tyler Winklevoss in late July, citing similar rationale.” We continue to advise RIA firms to exercise tremendous caution as it relates to cryptocurrency. 

4. Top Waddell & Reed team bolts to form RIA (Author- Bruce Kelly, InvestmentNews)

Bruce Kelly states in a recent post, “Waddell & Reed continues to lose reps and advisers. Most recently, a veteran, award-winning team in Northern California that produced $1.6 million in annual revenues bolted to start their own RIA.” Collectively, the pair had been at the firm for 50 years. According to the article, “on a year-over-year basis, head count was down 28.5% through the end of June.” This is just the latest in serious of large groups of advisors transitioning from the independent broker dealer to RIA space.

5. A Major Shift Is Coming in How Advisors Use Fintech (Author – Joe Elsasser, ThinkAdvisor)

“Full integration will overtake open architecture as the theme of the next decade. For years, financial advisors have looked for solutions that integrate, but have been provided with open architecture, which is simply the ability to connect multiple external systems to each other and transfer common information from one system to another without double entry,” according the Joe Elsasser. “Open architecture has its benefits, and it is easy to use and fast for fintech companies to set up and market.” To read the post in its entirety, click here.

Don’t forget to check out last week’s top RIA compliance news articles on the SEC’s Regulation Best Interest proposal. Be sure to check back next Friday for next week’s top articles!