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. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of July 23, 2016:
- Top Adviser Questions on DOL Fiduciary Rule Answered (Author- Tom Corra, InvestmentNews)
If advisers still have questions about the Department of Labor’s (DOL) Fiduciary rule they are definitely not the only ones. In this article, Tom Corra answers several of the more common questions advisers may have when coming up with their strategy to comply with the new rule. Among others, Corra clarifies topics such as when the best interest contract exemption (BICE) may or may not apply and the potential benefits of becoming a level-fee fiduciary. Take a look for answers as well as some insight into what other advisers are contemplating as the rule’s implementation date approaches.
- How to Comply With IRA Comp Rules Under DOL Fiduciary (Author- Fred Reish, ThinkAdvisor)
Advisors are encouraged to change their practices in regards to advising on retirement accounts before the April 10, 2017 compliance date. According to author Fred Reish, a well-known expert on the DOL fiduciary rule, it is “prohibited under the act for a ERISA-governed retirement plan to pay more than reasonable compensation to the plan’s service providers, which includes investment and financial advisors.” This is regardless of whether an advisor is currently considered a fiduciary or not. After the compliance date, however, almost every advisor to retirement plans and IRAs will be considered a fiduciary. This article explains the difference between a “pure” level fee advisor and a non-pure level fee fiduciary among other topics.
- Brokerage Groups’ Higher Spending on Lobbying Doesn’t Kill DOL Fiduciary Rule (Author- Mark Schoeff Jr., Investment News)
Continuing on this week’s DOL fiduciary rule theme, various trade associations representing the brokerage and insurance industries have thus far been unable to kill the rule despite outspending investment advisory groups on lobbying lawmakers. Those against the rule have tried putting a halt to it through lobbying and lawsuits, arguing that it is will increase regulatory costs and liability risk. Mr. Yamada, former president of the Financial Planning Association Central Oklahoma Chapter, believes “advisers should try to put themselves in front of their members of Congress and senators to make their policy case.”
- What Regulators Are Looking for in Your Firm’s Cybersecurity (Author- Wes Stillman, ThinkAdvisor)
Author Wes Stillman predicts that 20% of financial advisory firms will experience some type of security breach this year. Cybersecurity should be at the top of a firm’s to do list and composing a strategic and effective plan should a breach happen is the only way to protect a firm from a possible attack. “Cybersecurity management is a three-legged stool, with equal attention and care given to technology, policies, and people for optimal results.” Having the right technology in place such anti-virus, anti-spam, password management, and firewall tools is only a starting point. In addition, firms should have policies in place to monitor and manage the right technologies as well. RIA firms must be sure their procedures are effective enough to ensure they will be able to pass an audit. Lastly, it is crucial that all staff members of the RIA firm embrace and practice the policies set in place so they know what to do should a breach happen. Check out this article to read these important steps for cybersecurity management in further detail.
- Fight Cyber Threats By Stepping Up Policies (Author- Kenneth Corbin, Financial Planning)
Author Kenneth Corbins writes that in order to implement a successful cybersecurity program, an RIA firm must be able to evaluate their processes already in place and be able to proactively address current weaknesses. The human element is also a key part in a successful cybersecurity program. Kennet Westby, president of the security and compliance firm Coalfire Systems, believes “regulation is not the answer” and states “this should be a business issue.” Westby further explains that while some larger firms may be able to bounce back after a cyber breach, such a breach could put a smaller firm out of business.
Don’t forget to check out last week’s top RIA compliance news articles on new requirements for RIA firms advising on IRA rollovers and the “Level Fee Exemption.” Be sure to check back next Friday for next week’s top articles!