July 4, 2017
The Road Taken
There were twists and turns these last 12 months. It's time for our annual update to view
the road taken.
Do we have a DOL ERISA Fiduciary Rule or not? The rule of the road says "Yes," effective June
2017. But be prepared for more bumps in the road and detours.
Jay Clayton as the new SEC Chair will yield to taking on this fiduciary challenge so that it
will apply equally to fee and commissioned representatives and to retirement and non-retirement
accounts. That should pave the way for a smooth ride by all.
The Republicans are attempting to go full speed ahead with the Financial CHOICE Act to bypass
the Dodd-Frank Act. The Democrats have labeled this as the Wrong Choice Act. If enacted, financial
institutions can steer clear of burdensome regulations.
The SEC signaled big changes in your Form ADV disclosures. Beginning with ADV amendments on
October 1, 2017, be prepared to provide more detail about your separately managed accounts, branch
office operations, and use of social media. You will be required to maintain additional records
related to calculation and distribution of performance information.
All regulators (SEC, FINRA, NASAA and individual states) are on your side of the street in
protecting senior investors (vulnerable adults). While the Senior$afe Act is not yet complete, as
regulatory guidance and more SRO (FINRA) and state rules are put in place, you are expected to have
policies and procedures in place that include reporting to government and other third-parties and
delaying disbursements from client accounts when you suspect exploitative activity.
Do you know the way to avoid custody? The SEC has dumped some new facts and circumstances
that may make it harder to circumvent custody including Standing Letters of Authorization and
Inadvertent Custody by Custodian.
Do not exceed the posted limits that might restrict your employees from reporting wrongdoing
(whistleblowing) to the SEC. Have you checked the wording in your Policies & Procedures and your
Employee Agreements that erroneously requires reporting of malfeasance to your firm and not sharing
private information with the regulators?
The Consortium has the roadmap to help you navigate all of these barriers.
The Consortium has widened access to more talent. The Consortium has begun a collaborative
venture with a couple of like-minded, experienced compliance professionals:
- Todd Sakoda: Todd brings 20+ years of experience in the financial services industry
ranging from compliance and operations to business development and relationship management. His
last 12 years has focused on independent registered investment advisory firms. Over his career
he has worked with independent broker-dealer advisors and bank investment programs as well.
- John T. Carr: John brings an extensive legal background that has spanned over 25+ years.
As the founding owner of the Carr Butterfield, LLC law firm, John represents financial service
professionals throughout the country in matters with the SEC, FINRA, DOL, state securities and
insurance agencies and various courts. He understands the legal/regulatory environment of the
industry including a deep knowledge of ERISA matters.
There are resources to help you stay on the straightaway:
- 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 us 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 us for details.
Consulting services are available to help you remember all those compliance do's and
don'ts. Contact The Consortium to see how we can be of assistance to you: Todd@liftburden.com or
TAKE THE HIGH ROAD
(Adaptation of Robert Frost poem by Nancy Lininger)
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
Then took the compliant path, as just and fair!
And having surely the better claim,
Because it was legal and would not wear;
As for the wrong passing there
leads bad guys to unlikely fame,
And that morning the detour unequally lay
In leaves I had not trodden black.
Oh, could I keep compliance for another day!
Yet knowing how way leads on to way,
I doubted if I could ever come back.
I shall be telling this with an emotional high
Somewhere ages and ages hence:
Two roads diverged in a wood, and I —
I took the righteous to travel by,
And that has made all the difference.
The Consortium has been lifting the burden of compliance for you since July 4, 1989
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Lake Oswego, OR 97035
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