RIAs are subject to stringent compliance policies and procedures – fiduciary obligations, disclosure rules, and exams and inspections, to name a few. Often, meeting these requirements eats into the time and attention that could have otherwise been spent serving clients and growing businesses.
This is why the emergence of RIA compliance software has been an industry game-changer. These platforms are paving the way for RIA firms to automate compliance checks and improve overall operational efficiency.
In this article, we will delve deeper into these vital technological solutions. We will discuss how they work, what their key features and functions are, and how RIAs can find the right tool for their needs. An industry expert also shared his views on how these tools have become an integral part of an RIA firm’s compliance program.
Read on and find out how RIA compliance software can benefit your firm in this guide.
An RIA compliance software is an online platform designed to allow registered investment advisor (RIA) firms to better manage and automate regulatory tasks. These include maintaining and organizing compliance calendars, data collection, advisor submissions, and documentation. The tool also makes it easier for chief compliance officers (CCOs) and other compliance staff to track ongoing, past due, and completed obligations.
Most software providers offer customizable tools to suit the varying needs of both SEC- and state-registered RIA firms. These platforms come with secure, user-friendly dashboards for increased efficiency and ensuring that no new regulatory changes are overlooked.
A robust compliance software boasts features and functions that allow RIA firms to easily manage day-to-day and strategic compliance responsibilities. These include meeting state and Securities and Exchange Commission (SEC) regulations and standards – including fiduciary duty – and automating manual processes.
Here are some of the most important features and functions that RIA compliance leaders should look for when searching for the right platform:
This function enables RIA firms to monitor deadlines for different compliance activities. It also helps CCOs track which tasks are completed, ongoing, and past due. Firms can set how often reviews are conducted – weekly, monthly, quarterly, or yearly, for instance. Most compliance calendars integrate seamlessly with existing customer relationship management (CRM) systems for increased efficiency.
RIA compliance software lets users store and archive internal compliance documents in one secure platform for easy editing and retrieval to meet SEC Rule 204-2. With this feature, firms can keep a digital copy of their policies and procedures, code of ethics, and other compliance documents.
The tool allows firms to digitally manage the tedious process of attestation collection. Compliance teams can upload attestation documents for employees to review and sign-off. Workers then receive an email notification reminding them of the task. Once completed, the documents are automatically logged and time stamped. CCOs can also access the dashboard to view the attestation status of every employee.
RIA compliance software notifies firms if they are approaching the client de minimis in a particular state. This allows them to start the registration or notice filing process and finish it on time. The platform integrates with RIA firms’ portfolio management and reporting system to determine when the number of clients is nearing a state’s registration threshold.
Compliance management tools enable firms to review and make changes in the Form ADV. This helps expedite the process while providing a full audit trail of the historical changes. At the end of each fiscal year, compliance teams can also access a step-by-step checklist of the tasks needed to complete the renewal process. They are also alerted to any regulatory changes that may require them to update their information on the form.
RIA compliance software provides easy access to a range of educational resources to help teams keep abreast of the latest updates in RIA rules and regulations. These include webinars, industry articles, and video guides.
Firms can use the tool to add new RIAs to their roster by filling in the required documents, such as the Form U4 and Form ADV 2B, online. New employees can also complete online forms for the CCO’s review through the platform. This eliminates tedious paperwork that comes with the traditional onboarding process.
Online compliance management platforms provide RIA firms with a single hub to log completed tasks, which are then time-stamped. The log can be printed, filtered, or exported into an Excel file for easy review.
RIA compliance software is designed to enable firms to streamline the complex process of compliance. Using these tools frees up time, allowing companies to focus on providing excellent service and expanding their businesses.
“The biggest advantage of leveraging technology in compliance is that it automates monitoring and reporting, allowing firms to focus on flagged exceptions,” explained Chris Mortara, vice-president and senior compliance consultant at AdvisorAssist. “Email surveillance tools allow firms to flag keywords and specific phrases, while personal trading technology helps identify potential policy violations, making supervision more efficient and effective.”
Mortara also highlighted the role of AI and machine learning in enhancing these benefits.
“Introducing artificial intelligence (AI) amplifies this advantage. By integrating AI, firms can further enhance this efficiency by streamlining and automating the review process.”
Here are some of the benefits of AI use in facilitating RIA compliance:
RIA compliance software is an integral part of an advisor’s technology stack. Find out useful tips, strategies, and best practices in building a successful RIA tech stack in this guide.
While the use of compliance management platforms can provide several benefits for RIA firms, the adoption of AI may have legal and privacy implications.
“AI's advanced capabilities bring additional responsibility and regulatory scrutiny,” Mortara said. “As firms adopt AI-driven tools, the CCO must ensure robust oversight to balance innovation with compliance, demonstrating that these tools and systems meet regulatory requirements and ultimately protect investor assets.”
Here are some of the biggest challenges of using AI to facilitate regulatory compliance:
Here’s a guide on how RIA firms can protect against cybersecurity threats.
RIA firms are subject to various compliance requirements. This makes choosing the right RIA compliance software an important decision. To ensure that firms get the technology that best suits their needs, compliance management platform Comply provides this checklist of 10 “diligence questions:”
Many compliance platforms are designed to meet the requirements of the general broker-dealer and private fund sectors. While these tools may have features that can be helpful for RIA firms, they are not as extensive as those created exclusively for registered investment advisors. RIA compliance software boasts capabilities and functions that are better tailored to the needs of RIA companies.
The range of regulatory standards that RIAs must meet entails having a compliance tool with robust features. Some platforms offer one or two capabilities, prompting firms to purchase other software to meet compliance rules. Go with an RIA compliance software with a full range of features to assist with every regulatory requirement.
Check if the software provider has the means to improve the technology to keep up with changing regulations. Find out if it has an engineering and development team to respond to customer feedback and launch new features and fixes.
Consider purchasing an RIA compliance tool that offers both software and human expertise. Often, these are the software companies that created and developed the tools. Be wary of providers selling third-party platforms as they may not have overall control over the software and may not be able to resolve issues quickly.
RIA firms must be able to onboard the compliance platform within hours or days. This includes integration with existing CRM systems. This is where having a dedicated client onboarding and support team comes into play.
RIA firms should consider the long-term viability of working with a software provider. Do research to ensure that a vendor is profitable and has capital investments to maintain operations. Having to abruptly switch providers or not having immediate support or access to compliance data can have serious regulatory implications.
RIA firms are often given access to sensitive client information, making them attractive targets for cybercriminals. Ensure that the RIA compliance software has solid privacy and cybersecurity features and does not store client’s personal details.
Conduct background checks of the software creators. Go with a provider that has extensive knowledge of RIA compliance rules and regulations to ensure that there are no regulatory gaps.
As RIA firms are required to publish fee schedules on their Form ADV Part 2, it’s fair to expect software providers to publish pricing in a way that’s easy to access and understand. This makes negotiations transparent and facilitates communication between both parties.
Check if the RIA compliance software vendors support many similar firms. This can be an indication that they are providing the right features and services. It can also show that firms trust their capabilities.
If you’re searching for account management tools instead, this guide on the best RIA account management software can prove useful.
With compliance rules and regulations constantly evolving, getting the best RIA compliance software is among the most effective strategies firms can take to grow their businesses. These tools can help compliance teams automate paperwork and streamline workflows, allowing companies to devote more time and attention to providing excellent service.
As digital transformation takes over virtually all industries, taking advantage of technological advancements – RIA compliance platforms included – can lead to solid gains.
If you’re searching for investment software tailored to your unique needs, our Best in Wealth Special Reports section is the place to go. The companies and professionals featured in our special reports have been nominated by their peers and vetted by our panel of experts as reliable and respected market leaders.
Recently, we unveiled the five-star awardees for the Best New Technology and Software for Investment Management Professionals. Find out in this special report how these platforms can help your firm reach new heights.
Visit our goRIA section for the latest updates on SEC compliance rules and regulations. Don’t forget to bookmark this page for easy access to breaking news and the latest industry developments.
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