Top RIA Compliance News Articles for the Week of January 7, 2017

1. SEC’s Top 6 Exam Priorities for 2017 (Author- Melanie Waddell, Think Advisor)

On Thursday, the SEC Office of Compliance Inspections and Examinations revealed its list of 2017 RIA examination priorities. Think Advisor columnist, Melanie Waddell, details the top six exam priorities for 2017. The top six priorities outlined are: electronic investment advice (e.g. robo-advisors), wrap fee programs, exchange-traded funds, share class selection, recidivist reps and employees, and ReTIRE (e.g. retirement accounts). The SEC staff also notes that it remains focused on its Never-Before Examined Adviser initiative. However, this year, the staff notes that it will expand the program to “include focused, risk-based examinations of newly registered advisers as well as of selected advisers that have been registered for a longer period but have never been examined by OCIE.” 

2. Scaramucci, Hedge-Fund Show Impresario, Scores White House Role (Author- Simone Foxman and Kevin Cirilli, Bloomberg)

The founder of SkyBridge Capital, Anthony Scaramucci, has been named President-elect Donald Trump’s assistant. Scaramucci graduated from Harvard Law School and went into real-estate investment banking at Goldman Sachs early in his career. He has continued to be a dedicated member of Trump’s transition team. His New York-based firm, SkyBridge Capital, is e managed $9.2 billion as of last January. However, of more relevance to RIA firms, Scaramucci has been one of the most outspoken critics of the DOL fiduciary rule. Time will tell how much ultimate influence he has on the future of the rule.

3. Only a Fraction of Advisors Prepared For DOL Rule, Assessment Says (Author- Karen Demasters, Financial Advisor)

A recent study conducted by AssetMark across 400 advisors reveals that only 5 percent of those advisors are presently ready to comply with the new DOL fiduciary rule. Furthermore, Karen Demasters writes that the study reveals that “only 34 percent understand the new regulations well enough to implement them, a statistic AssetMark calls shocking.” According to Natalie Wolfsen, chief commercialization officer at AssetMark, the “majority of advisors…who we are speaking to are interested in making a shift from commissions to fees.” Ultimately Wolfsen concludes that, “”with or without the DOL rule, advisors should review their client base so they can better understand their business and their clients’ needs.”

4. RIAs Could Be Ultimate Winners if DOL Fiduciary Rule is Repealed or Delayed (Author- Jeff Benjamin, Investment News)
   

As a follow up to last week’s top compliance article from Bob Veres,  Investment News’ Jeff Benjamin also writes that if the DOL rule is repealed,  RIA firms may stand to benefit the most. Benjamin opines that “an irony is emerging in that the strongest supporters of the rule could benefit the most from the rule’s demise.” Skip Schweiss, managing director at TD Ameritrade Institutional, believes RIAs will benefit from the rule getting delayed or repealed because “so much spotlight has been put on the topic of fiduciary responsibility, and advisers have been putting their clients’ interests first since 1940.” Bill Van Law, president of the Investment Advisors Division at Raymond James & Associates, concludes that, “for RIAs, it’s actually the best of both worlds because it represents less competition, and consumers have become more aware of the concept of fiduciary duty.”

5. Why Advisers Should Switch to Fees from Commissions (Author- Bob Veres, Financial Planning)

Industry guru Bob Veres writes that, “I believe that the financial planning profession has reached an inflection point. The rate of change is now rising faster than the ability of aging baby boomer founders to adapt.” Veres attempts to explain why some the industry’s largest advisory firms have experienced a recent decline in assets and revenues. He notes three key drivers of this recent shift: 1) technological change: the emergence of increasingly powerful and intelligent advisor software, 2) Client changes: firms aren’t opening their doors up to clients of the future,  and 3) Revenue models: a gradual shift from asset under management (“AUM”) based fees to retainer models. Veres argues that many advisors that have made the shift to the retainer model have “suddenly realized how much more free they felt to give advice in their clients’ best interests.”

Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule and Jay Clayton, President-elect Donald Trump’s nominee to serve as chairman of the SEC. Be sure to check back next Friday for next week’s top articles!