Top RIA Compliance News Articles for the Week of June 10, 2017

1. How to Survive an SEC Exam (Author- Kenneth Corbin, Financial Planning)

Financial Planning reporter, Kenneth Corbin, brings us this article where he reports on a live webcast the SEC hosted earlier this week as part of their compliance outreach program for investment companies and investment adviser senior officers. In regards to when the SEC may consider pursuing an enforcement action against the firm, Paul Montoya, an assistant regional director at the Chicago office’s enforcement division, concedes “Another big consideration for me is the tone of the registrant during the exam — is the registrant conciliatory or are they defiant?” Corbin writes that the SEC considers whether the firm is a “repeat offender.” A repeat offender is not only a firm that has previously been sued by the SEC, but also applies to firms that “were cited for a deficiency in a prior exam, and then, years later, are found to be engaging in the same conduct.”

2. SEC Issues FAQs Guidance on Form ADV (Author- Melanie Waddell, ThinkAdvisor)

According to Melanie Waddell, a Think Advisor reporter, “the SEC has released additional Form ADV and IARD frequently-asked-questions guidance addressing cross-border investment managers.” The new FAQs help to provide some additional guidance related to the Form ADV changes which will take effect on October 1, 2017. In particular, this latest guidance helps to clarify new social media account disclosures and umbrella registration scenarios.

3. 8 Thoughts and 4 Questions on the DOL Fiduciary Rule and Its Impacts (Author- Ron Rhoades, Scholarly Financial Planner)

Fiduciary advocate Ron Rhoades shares this blog post on his thoughts and questions related to the DOL fiduciary rule which recently took effect on June 9, 2017. A few thoughts he discusses pertain to the impartial conduct standard, American business owners, and the effect of the rule on insurance companies and asset managers. After much discussion, Rhoades has four remaining questions he hopes will be answered in the coming months. Read his detailed thoughts and remaining questions in regards to the fiduciary rule in his article.

4. Interesting Angles on the DOL’s Fiduciary Rule #51 (Author- Fred Reish, Fredreish.com)

Fred Reish, one of our top 5 DOL fiduciary rule experts to follow, published his 51st article about his observations on the DOL fiduciary rule. In this particular article, he discusses investment recommendations provided to an IRA owner and how it applies to transferring an IRA from another firm. Reish notes that, “if the recommendation is accepted and the IRA is transferred, the adviser will obviously make more money than if it were not. That is a financial conflict of interest that is a prohibited transaction under the Internal Revenue Code.” Given the prohibited transaction, the advisor will then need to utilize the Best Interest Contract Exemption (“BICE”). Reish discusses the need to comply with the Impartial Conduct Standards with a particular focus on the “requirement to engage in a best interest process.”

5. RIAs, Don’t Assume You’re Already in Compliance With DOL Fiduciary Rule (Author- Ric Edelman, ThinkAdvisor)

According to Ric Edelman, Executive Chairman at Edelman Financial Services, many RIAs believe they already act in the best interest of their clients and don’t sell high-commission products, therefore the DOL fiduciary rule does not apply. Edelman claims this is not accurate. He stresses that it is not just about acting in the best interest of clients but making sure it is documented. In this article, he explains a few new aspects and tries to convince RIA firms to understand the rule has important implications that need recognized. Edelman urges, “it represents a new way of doing business for all of us, and it’s important that we all recognize that.”

Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!