Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of November 19, 2016:
- PRI Policy Brief: Re: Updated Impact Analysis of November Elections on DOL Fiduciary Rule (Author- Jason C. Roberts, Esq., LinkedIn)
Since the November 8th election of President-Elect Donald Trump, there has been continued speculation regarding the future of the Department of Labor (DOL) fiduciary rule. In this latest update, Jason Roberts, one our top 5 DOL fiduciary rule experts for RIAs to follow, provides an updated viewpoint on the future of the rule. Ultimately, Roberts concludes that, “the potential for a change in the Fiduciary Rule is now likely, although it is not clear whether these changes will come through the courts, through Congress, the Trump Administration, or some combination.” However, Roberts is not absolute in his latest opinion and concedes, “this assumes that overturning the rule is a priority of the Administration…that said, if it’s not a high-priority item, then the rule may become a ‘bargaining chip’ between the Administration and Senate democrats.”
- There’s No Getting Out of Fiduciary Duties (Author- David Trainer, Wealth Management)
Despite the presedential election results causing speculation that the Department of Labor (DOL) fiduciary rule regulation may be put on hold, David Trainer asks, “even if Trump did kill the rule, do wealth managers want to risk reputational damage for reverting to pre-fiduciary practices?” Trainer presents the case that fiduciary expectations from clients are here to stay and ultimately Trainer concludes that, “no one can say at this point whether the DOL Fiduciary rule will be allowed to stand, or if it does how it will be interpreted…what we can say is that the push for this new rule in the first place shows that the status quo is not working for a large number of people.” In addition, Trainer also provides his perspective on the types of “unconflicted” research and diligence advisors should perform to help fulfill their fiduciary obligations.
- Interesting Angles on the DOL’s Fiduciary Rule #28 (Author- Fred Reish, FredReish.com)
Under the new DOL fiduciary rule, an advisor’s recommendation to a client to of a plan distribution or IRA rollover into an account managed by the advisor is subject to the standards of the rule. However, “what if a participant takes a distribution and rolls over into an IRA with an adviser . . . without a recommendation by the adviser?” Fred Reish provides some simple but clear guidance on such a scenario by citing question 4 of the recent DOL fiduciary rule frequently asked question (FAQ) document which explicitly states, “in the absence of an investment recommendation, the rule does not treat individuals or firms as investment advice fiduciaries merely because they execute transactions at the customer’s direction.”
- Small-Business Cybersecurity Advice From The Experts (Author- Ted Knutson, Financial Advisor Magazine)
Ted Knutson writes that cybersecurity remains a top concern for RIA firms and regulators alike. While most security firms instruct businesses to implement standard best practices such as, “use unusual passwords and change them often, and don’t click on links and attachments you weren’t expecting, even from people you know,” the National Institute of Standard and Technology (NIST) also recommends that the principal of a small business first conduct a personal background check on his or herself to determine if identity theft has unknowingly taken place. In addition, NIST recommends that employees only have access to company data they need access to in order conduct their job. This practice can help minimize the potential damage should a single company user’s account become compromised. Lastly, NIST also instructs business owners to “not go overboard in buying and installing computer programs,” as each program can provide a potential entry point for a hacker.
Don’t forget to check out last week’s top RIA compliance news articles on the potential renewed attempt by FINRA to become the RIA regulator and Mary Jo White’s announcement that she will step down as the chairwoman of the Securities and Exchange Commission. Be sure to check back next Friday for next week’s top articles!