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 June 25, 2016:
- New SEC Proposal Will Force Advisors to Plan for Succession (Author- Diana Britton, Wealth Management)
Succession planning is not often front of mind for many advisors and when overlooked can leave clients exposed to profound risk should circumstances arise that prevent the advisor from continuing to operate their firm. The SEC hopes to address this issue with a proposal for a new rule that would require advisors to compose and maintain transition plans. The rule would require advisors to review their plan at least annually and stipulates that the plans should include how the advisor will maintain their firm, protect client data, arrange work sites, and keep constant communication with third party providers. Should services come to a close, they must have a plan for how they will handle this transition as well. Check out this article to read more on the details of the new proposed rule that would apply to SEC-registered RIA firms.
- Perez Shrugs Off DOL Fiduciary Rule Lawsuits, Vows Continued Outreach to Industry (Author- Ginger Szala, ThinkAdvisor)
In this article Ginger Szala reports on why Labor Secretary Thomas Perez is confident the Department of Labor’s (DOL) fiduciary rule will succeed despite the lawsuits filed against it. Pointing out that while “some folks in the industry would like a Best Interest Rule as long as it is not enforceable,” Perez does not believe a rule can be marketed without it being enforced. He believes this particular rule will prevail because is is “not only a strong product, but a product that’s a result of a very robust process.” Along many politicians, the agency is very proud of the final product and continues to elaborate on why they believe it is in consumers’ best interest and will produce desired outcomes. Check out this article to learn more.
- Three States Make Elder-Financial-Abuse Reporting Mandatory Starting Friday (Author-Mark Schoeff Jr., InvestmentNews)
On Friday, July 1, a law will go into effect that requires financial advisers in Alabama, Indiana, and Vermont to alert state authorities of suspected financial abuse of the elderly. This also includes reporting financial abuse of older adults, 65+, who are disabled. The North American Securities Administrators Association Inc. has made this hot topic one of their top priorities by previously releasing an elder financial abuse model rule for RIA firms . Other organizations such as the Financial Industry Regulatory Authority Inc. (FINRA) and the Securities and Exchange Commission (SEC) have also targeted this issue as one of the top of their concerns. Joseph Borg, director of Alabama’s Securities Commission believes “the focus on this issue is a natural result of the burgeoning number of retirees and their wealth.” A large adoption of this rule among other states can be expected to happen in the next year.
- 4 Useful Hacks for the SEC’s IAPD Disclosure Site (Author- Chris Stanley, Think Advisor)
The Securities and Exchange Commission’s (SEC) Investment Adviser Public Disclosure (IAPD) website is available for potential clients to research investment advisers. Chris Stanley is a big fan of this website and stated he has spent a great deal of time repeatedly visiting and reading what it has to offer. The site can be used for not only clients, but advisers as well. In the last few months, the site has been noticeably updated since the SEC established it back in 1996. In this article Stanley shares his top IAPD “hacks” that could potentially educate those in the industry as well as improve your business.
- Another New Regulatory Burden Coming For RIAs (Author- David Armstrong, Wealth Management)
While advisors may still be observing how they will implement fiduciary standards for retirement accounts, the Department of the Treasury and the Financial Crimes Enforcement Network (FinCEN) may soon require SEC-registered RIA firms to develop anti-money laundering (AML) rules. RIAs will also have to “appoint a dedicated chief AML officer, report suspicious activity in client accounts, and keep additional records of clients’ cash transactions.” The law will also prohibit custodians from completing these reports for advisors. The main priority under this proposed rule will be for advisors to report and maintain all records of accounts they oversee.
Don’t forget to check out last week’s top RIA compliance news articles including results of a poll on top RIA compliance concerns and the largest risk that doesn’t come from your portfolio. Be sure to check back next Friday for next week’s top articles!