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 9, 2016:
- How Financial Advisory Firms Can Practice Emergency Preparedness (Author- Sheryl Rowling, Investment News)
Every responsible advisor should have an emergency plan for their firm should something go wrong. Furthermore, this plan should be tested periodically to make sure it can be executed efficiently and smoothly. Author Sheryl Rowling shares three stages advisors should follow when testing their emergency plan: notification, planning, and implementation. The slower summer season is also a great time to start testing your firm’s emergency plan, she argues. This article is also particularly timely given the recent Securities and Exchange (SEC) rule proposal that would require all SEC-registered RIA firms to implement a written business continuity and transition plan. Check out this actionable article to read about the three stages to help your firm appropriately test its emergency plan.
- SEC Launches Exam Sweep of Advisors’ Share Class Picks (Author- Melanie Waddell, Think Advisor)
On Wednesday, July 13, the SEC Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert announcing its Share Class Initiative. This means SEC examiners will evaluate when advisors are making recommendations about share classes to their clients to assess whether conflicts of interest are present and whether such conflicts are properly mitigated and disclosed. The purpose of this is to make sure advisors are carrying out their fiduciary duty and making the best decisions for their clients. The SEC has not disclosed how many examiners will participate or how long the process will take, but suffice to say this will continue to be a regulatory focus area.
- Succession Planning is Not About You. It’s About Your Clients (Author- Mike Lockwood, Wealth Management)
Succession Planning is not something every advisor enjoys preparing for after spending years of putting hard work and time into a company. According to Mike Lockwood, the most important thing to consider when preparing for succession, however, is the impact that it has on your firm’s clients. They put a lot of trust into their advisors and deserve the time to get to know who will take over managing their finances once their original advisor is gone. Lockwood shares that preparing for succession should begin years before a financial advisor plans to retire. In this article, he elaborates on the reasoning behind preparing for succession early and shares his advice based on personal experience with succession planning for his own business.
- The Fear Factor (Author- Dan Moisand, Financial Advisor)
Since the release of the long awaited Department of Labor (DOL) fiduciary rule, the industry has not ceased to wonder how the rule may be altered by the challenges against it. However, according to Dan Moisand, the loudest voices of speculation, however, tend to be those of skeptics telling unfounded or misleading cautionary tales. During times of change it is important not to get swept up in counterproductive worry. Instead it is better to relax and make thoughtful and informed decisions. Moisand provides some great advice in this article and pin points certain things advisors should keep in mind about the new DOL rule and fiduciary responsibility. Read on to learn more.
- SEC Approves Reforms to In-House Process For Enforcement Cases (Author- Mark Schoeff Jr., Investment News)
In other news from Wednesday, July 13, the SEC adopted amendments updating the rules of practice for administrative proceedings. Among other reforms, parties involved in a case will now have a more flexible time period to prepare before their first hearing and will also be allowed to conduct depositions. These changes will be published in the Federal Register and will go into effect 60 days later. According to Mark Schoeff, the constitutionality of the SEC judges has been challenged by advisors and opinions on the SEC’s decisions continue to vary among the industry. However, the Supreme Court declined to hear a case on the issue and this appears to be a step in the right direction.
Don’t forget to check out last week’s top RIA compliance news articles on new Wyoming RIA rules and accredited investor definitions. Be sure to check back next Friday for next week’s top articles!