The biggest regulatory issues RIAs face today

Jun 10, 2014 @ 12:00 am

Runtime: 3:04

A panel of regulatory and compliance experts weigh in on big issues like cybersecurity and risk management that registered investment advisers face with increasing frequency.

Video Transcript

[MUSIC] Right now RA's are facing a variety of regulatory issues. The one that we see that's the most at the top of mind, is really conflicts of interest. How are they disclosing it properly, but even more than just disclosing it, how are they making sure they are truly acting in their clients best interest beyond that disclosure. Cyber security issues are top of mind. Protecting client assets and the integrity and reputation of the firm, is really of paramount importance in this day and age. Secondly, the use of social media, and how firms monitor the policies around social media, in the way that they're associates may be using social media. I think one of the biggest regulatory issues, facing RIAA's is enterprise risk management. Are you really doing what you can to address, the risks that are inherent in managing, your business. Not necessarily just managing your clients. What's keeping my clients up at night is probably, the unknown. The unknown of where the SCC is gonna look. Whether the compliance officer is gonna be found personally liable in case of some problem. Now, the good thing is the SCC has given guidance over the past year or two, that they're not looking to go after supervision responsibility. Just because you were the chief compliance officer. So, that should allow at least the officers to sleep a little better at night. The firm's themselves is just making sure they keep up on the myriad of changes. So we're all for smart regulation that keeps our, the investors safe, that keeps our industry strong. But it needs to be delivered in a way that's thoughtful and creates efficiency for the industry overall. If an RA wants to be bullet proof for an examination ,they really should think about. Looking at their policies, testing to make sure that what they say they're doing is actually being done, but then going back to make sure that they were effective as well. Is the intent of that policy really what's getting delivered or is this someone just going through the motions. Examinations have gotten much longer. They've gotten much more detailed, and they're covering. breadth, not only depth of subject matter expertise, so it's of paramount importance that firms are here early. I think advisers should prepare every day for an examination. It's a little like we used to get told back in school. Don't cram for the exam. Spread your work out over the whole semester, and that's the same thing with advisers. Don't wait until you get an exam request letter from the SCC, to start preparing. Prepare every day. The other piece of advice I would give is. Make sure that you as a chief compliance officer, are not the only one that's really getting involved and, and knows the compliance program of the firm. Make sure you're doing proper training. Make sure employees understand what the firm is on the hook for doing as well. I think you can prepare yourself by examining yourself first. really, take, they had of a regulator, go into your business, kick the tires, do what you think you would expect to be done when the regulators come. That way you can identify any risks or deficiencies that you have become they become an issue. [MUSIC]


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