Top RIA Compliance News Articles for the Week of September 16, 2017

1. SEC’s Cybersecurity Warnings Take More Urgent Tone After Hacks (Author- Kenneth Corbin, Financial-Planning.com)

In the wake of the Equifax fiasco and the recently disclosed Securities and Exchange Commission (“SEC”) EDGAR system hack, the SEC is plainly stating its concerns regarding cybersecurity. SEC chair Jay Clayton is urging advisors and firms to shore up defense and plan for a possible incident, should one occur. That said, he is also realistic about cybersecurity. “I recognize that even the most diligent cybersecurity efforts will not address all cyber risks that enterprises face,” Clayton says. “That stark reality makes adequate disclosure no less important.” The SEC also recently published its latest examination risk alert related to RIA cybersecurity best practices.

2. Regulatory ‘Mess’ as States Enter Fiduciary Fray (Author- Melanie Waddell, Think Advisor)

According to Melanie Waddell, many believe there may be too many cooks in the kitchen regarding the DOL Fiduciary rule. As individual states begin weigh in with new proposed fiduciary legislation, the noise surrounding the already complicated legislation has become more challenging. Some are urging the SEC to pursue a uniform fiduciary standard to establish a clear federal guideline. This continued uncertainty also persists as the second phase of the DOL’s current fiduciary rule is likely to be further delayed. However, the DOL fiduciary rule did become applicable to all RIA firms as of June 9, 2017.

3. DOL Plans to Gut Fiduciary Rule, CFA Claims (Author- Dan Jamieson, FA Magazine)

An advocate of the DOL rule, the Consumer Federation of America (“CFA”), is concerned that the DOL wants to scrap parts of the fiduciary rule. The CFA argues a delay in the rule’s implementation could be technically illegal. They claim a stay in any pending rule is permissible only if federal requirements are met. The CFA says that the DOL has not met these requirements. “It appears the DOL wants to make sure the operational requirements of the rule don’t kick in, and that’s effectively a revocation, and they can’t do that,” says Micah Hauptman, CFA’s financial services council. 

4. Why Operations Teams Are the Unsung Heroes Behind Breakaways (Author –Anna Maria Garcia, InvestmentNews)

For the most part, attention focused on aspects of the breakaway movement has been on the advisors themselves, or on the aggregate assets in transition. However, Anna Maria Garcia argues that unseen operations teams are the ones who can and do ensure the smooth transition of an independent advisor. Advisors certainly must be inspired and intrepid, but it’s the operations teams who execute the ideas behind the scenes, filing paperwork, building new processes, and gathering client information. Garcia encourages advisors to support and appreciate the efforts of operations teams before, during, and after breakaways.

5. Weekly WealthTech Report: RIA in a Box Wins Best in Show at Fuse (Author- Ryan W. Neal, WealthManagement)
   

The Fuse Conference, hosted yearly by Orion Advisor Services, is an RIA industry technology hackathon. For the third year in a row, RIA in a Box snagged the Best in Show award among 26 other participants. The new vendor due diligence tool which was built by RIA in a Box at Fuse gives RIA firms, “access (to) electronic documentation and storage of due-diligence information.” Industry technology evangelists, Joel Bruckenstein, Michael Kitces, and Bill Winterberg were among the judges this year at the Utah event. Orion CEO Eric Clarke said, “Fuse continues to bring together the most creative names in fintech to create cutting-edge, efficient innovations for advisors. Congratulations to RIA in a Box and all the Fuse winners—the talent demonstrated this year continues to amaze us.”

Don’t forget to check out last week’s top RIA compliance news articles on disaster recovery plans and a new SEC examination risk alert on RIA advertising. Be sure to check back next Friday for next week’s top articles!