July 4, 2016
Forget Me Not!
Lest you forgot the highlights (and the dark side) of the past 12 months — here is your year in review.
Starting with the elephant in the room, the new Department of Labor ERISA Fiduciary Rule has consumed the headlines, so I will spare you the details. I will leave you with just one thought... fee-only Investment Advisors are not immune from the reach of the rule.
There has been so much hullabaloo about the Fiduciary Rule that it may have been very easy to forget all the other important "normal" compliance matters. Let me refresh your memory.
Vulnerable (elderly) clients with diminished capacity need you to be mentally alert to potential financial abuse by caregivers, family, and friends (including new-found "friends.") The regulators are on your side and putting rules in place allowing you to put freezes on suspicious withdrawals from accounts.
Can Robo Advisors be fiduciaries? Is artificial intelligence as good as a human brain? Technology sure has transformed this industry since I was a stockbroker in the early '80's and I had access to a Quotron machine. But just like people should not use surgical tools to operate on themselves, it does take the human expert (financial advisor) to properly manipulate all the good financial software programs. The do-it-yourself investor cannot be expected to be able to have accurate input for valid output.
Pay-to-Play (political contributions) rule has been bantered about. But who in their right mind really wants to make campaign contributions this year!? OK, there may be some good (non-presidential) contenders still deserving of money, so just follow your policies and procedures to be in compliance.
Once again the Treasury has verbalized its thoughts about Anti-Money Laundering ("AML") rules for Registered Investment Advisors. The proposed rule is just that... not adopted. It is likely the AML rule for RIAs will differ from the current Broker/Dealer rule. While RIAs cannot turn a blind eye to AML and must adopt some very basic AML procedures, I have not gone overboard on adopting detailed procedures based on what may or may not be.
State news from two jurisdictions may have slipped your cognitive powers. • Wyoming finally got around to registering investment advisors. If you are a small RIA domiciled in WY and been able to register with the SEC, you will need to switch your registration no later than July 1, 2017. • Louisiana made a change to now apply the exam qualifications to IA Reps of SEC firms too. Previously this only applied to state-registered firms in Louisiana.
There is some good news about the annual Privacy Notice mailing that may give you peace of mind. You may qualify for an exemption from the annual mailing if you do not share non-public personal information ("NPI") in a manner that does not require an opt-out on your Notice, and you have not changed your policies and practices with respect to disclosing the NPI. (But don't forget to share the initial Privacy Notice to clients!)
Much like the Presidential campaign where none of the options are winners, the lack of sufficient budget for the SEC will likely create third party compliance review exams. It's not the best solution by anyone's standards, but it may be a necessary evil. Don't wait for the results to be final, make sure compliance is currently top of mind.
There are resources to help you to remember your compliance duties:
- CompliancE-Post: A free monthly e-mail service with brief postings of what's the hot industry buzz.
- CompliancE-News: The monthly executive summary of all the news that made the news. Don't wait for the annual update — get timely details.
- CompliancE-Alert: A value-added subscription service (which also includes the CompliancE-News) - provides timely alerts when news hits, and newly published research and forms.
If you are starting out or in need of a refresher, check out Go to CEO! How to Start Your Investment Advisory Firm - available as an e-book.
Additional compliance resources... If you are a do-it-yourself type person, I offer an array of products that are both educational and easily customizable to your practice. Click here for a complete list.
RIA Fast Track Program includes compliance resources and consultations to get your operations up and running. Designed as a start-up service for new RIA firms, it is a part do-it-yourself and part "Ask the Expert." If you are creating a new RIA, contact me for details.
RIA Pump It Up Refresher Course includes compliance resources and consultations to get your operations in tip-top shape. Designed to lift the burden of compliance off your shoulders in an efficient and economic manner, it is a part do-it-yourself and part "Ask the Expert." If you need to dust off your compliance files, contact me for details.
Consulting services are available to help you remember all those compliance do's and don'ts. Contact me to see how I can be of assistance to you.
To claim your Forget-Me-Not seed package, send your request with name and USPO mailing address to Nancy@liftburden.com.
Click here to connect with me via LinkedIn.
I have been lifting the burden of compliance for you since July 4, 1989