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 the 2018 regulatory forecast, the Department of Labor (“DOL”) fiduciary rule, and cryptocurrencies. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of December 29, 2017:
- What to Expect on the Regulatory Front in 2018 (Author- Mark Schoeff, Jr., InvestmentNews)
In this podcast, Schoeff interviews Karen Barr, the president and chief executive officer of the Investment Adviser Association.They discuss the full staffing of Securities and Exchange Commissions (“SEC”) commissioners, potential legislation impact RIAs, and the future of the DOL fiduciary rule. In regards to all of the SEC commissioner posts being filled, Barr notes, “there may be more activity on the enforcement side” as it relates to RIA regulation at the federal level. The cast is twelve minutes long and a worthwhile listen.
- Why Financial Planners Should Support a Strong Fiduciary Rule (Author- Barbara Roper, FinancialPlanning.com)
Roper contrasts DOL fiduciary rule supporters and detractors. Roper quotes Mark Elzweig, who has stated that Congress needs to step in and repair the fiduciary rule, and that it will hurt investors. Roper argues against this, stating the rule has several benefits, and the problem lies in the enforcement of the rule. She sums up, writing, “unfortunately, the benefits of the Labor Department rule have been put on hold while the department gives special interests one more chance to make their case for weakening the rule. As responsible industry groups like the Financial Planning Coalition have made clear, that would be bad for investors and bad for the profession.”
- FINRA Releases FAQ on Elder Exploitation Rules (Author- Melanie Waddell, Think Advisor)
“The Financial Industry Regulatory Authority released Wednesday a set of frequently asked questions on the self-regulator’s rules relating to financial exploitation of seniors, which take effect on Feb. 5,” Waddell reports. This is in conjunction with new Rule 2165, stating that FINRA members can hold disbursements if suspicious activity is suspected. Though rules are in place to protect seniors, exploitation has become a problem. Other items covered in the FAQ include trusted contact information, such as who may serve as the trusted contact, requirements to obtain the information of the trusted contact, and whether or not a client is even required to provide a trusted contact. While FINRA has no regulatory oversight over RIA firms, this latest guidance could influence future RIA regulatory rule-making and guidance as it relates to potential elder abuse.
- Advisors Refocus On Tech, Disruption In 2018 (Author- Christoper Robbins, Financial Advisor Magazine)
With the DOL fiduciary rule partially on hold this year, 2018’s focus, according to Robbins, will be on the practice itself, including “policy, technology, investments and their clients”. Even last year, advisors stated via the survey that they are concentrating on practice management and technology. Prior to this, the main focus was on the DOL fiduciary rule. The shift makes sense among widespread cybersecurity concerns. “Advisor concerns have shifted toward technological disruption.”
- All Wirehouses Forbid Cryptocurrency Trading, Not Just Merrill Lynch (Author – MIchael Thrasher, WealthManagement.com)
In a move sparked by Merrill Lynch, big advisory firms such as Wells Fargo and Morgan Stanley have banned the use of cryptocurrencies, such as Bitcoin, in investment accounts. The decision comes from, “caution around the unique risks and hurdles of the underlying cryptocurrencies and exchanges. Fees to trade cryptocurrencies can be expensive, some of the exchanges have faced liquidity issues and the volatility of the new asset class raises a suitability question for clients,” writes Thrasher.
Don’t forget to check out last week’s top RIA compliance news articles on cybersecurity, the DOL fiduciary rule, and broker protocol. 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.