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 significant announcement that the implementation of the Department of Labor (“DOL”) fiduciary rule has been delayed. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of February 4, 2017:
- DOL Files to Delay Fiduciary Rule (Author- Melanie Waddell, Think Advisor)
As reported by Melanie Waddell of Investment Advisor Magazine, the DOL and the Office of Management and Budget (“OMB”) “filed a notice” to announce the expected delay of the fiduciary rule. Reviews for the OMB typically take 10 to 14 days. From there, within one day it will be sent to the Federal Register for publication. The length of time for the delay has not been revealed, however 180 days from April 10, 2017, the current date the rule is supposed to go into effect, has been widely discussed. According the Waddell, “Trump signed an executive order on February 3rd directing the Labor Department to undertake an assessment of its fiduciary rule, and if it deems appropriate, a proposal to revise the rule making, which industry officials say would delay the rule’s April 10 effective date.”
- The DOL Fiduciary Rule: What’s Next? (Author- Christine Benz, Morningstar)
Morningstar’s Christine Benz discusses the potential outcomes of President Donald Trump’s decision to have the DOL review and examine whether the fiduciary rule will help or harm investors rather than halt or kill the rule. Benz reports, “If after such an examination it finds the rule creates more harm than good, the DOL is tasked with rescinding or revising the rule.” Director of policy research for Morningstar, Aron Szapiro, believes, “it may be even harder to reverse a recently passed rule given that the agency would need to justify changes and contradict recent analysis.” In the meantime, investors are gravitating towards advisors who already act as fiduciaries due to their concern about conflicts of interest.
- Got Client Passwords? That Means Custody to SEC (Author- Liz Skinner, Investment News)
Liz Skinner reports that earlier this week, the Securities and Exchange Commission (“SEC”) highlighted the Custody Rule as one of the top five areas of the most common RIA compliance deficiencies. In particular, Skinner notes that “one of the main deficiencies it sees is advisers not recognizing that the online access clients have granted them means they technically have custody.” GJ King, President of RIA in a Box, highlights that “the custody issue can create some real serious compliance issues that are usually unintended. As RIA compliance consultants, we caution all RIA firms to ensure that they do not possess client username and passwords which may lead to a number of custody-related compliance issues.
- The Other Regulatory Changes Coming For Advisors (Author- David Armstrong, Wealth Management)
The DOL fiduciary rule continues to attract all the attention in the industry as the future of the rule is still yet to be determined. However, David Armstrong, Wealth Management Editor-in-chief, reports a panel of experts at the recent TD Ameritrade Institutional conference reveal the fiduciary rule is not the only regulatory change that RIA firms need to focus on. Armstrong claims, “the list includes anti-money laundering rules and mandated emergency succession plans that will, for the first time, be extended to include RIAs.” Check out this article to discover some of the other lesser-known regulatory changes that investment advisers need to review.
- How Will Trump’s SEC Handle RIAs? (Author- Thomas Seubert, Wealth Management)
Thomas Seubert of Wealth Management brings us this article on how the SEC’s National Examination Program (“NEP”) may change under President Donald Trump. Seubert divides the areas of RIA focus in three parts: 1) exam priorities, 2) “broken windows enforcement,” and 3) third-party examinations. In regards to audit priorities, the SEC added a few new focus areas including “robo-advice, money market funds and protecting senior investments.” The broken windows enforcement “proposes that the enforcement against minor offenses such as vandalism or toll-jumping, signals lawfulness and deters would-be-offenders from committing more heinous crimes.” It’s unclear whether this type of enforcement initiative will continue. Third-party examinations are still potentially on the table for 2017 as “one of the major complaints of the NEP is a lack of examiners.”
Don’t forget to check out last week’s top RIA compliance news articles focusing on the potential delay of the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!