More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
Independent broker/dealers and investment advisors lobbied members of Congress with a three-pronged message during the Financial Services Institute's (FSI) Public Policy Day in Washington September 13. FSI members hammered home to lawmakers that more than ever, Americans need financial advice and advisors and broker/dealers are best suited to provide it; independent advisors and some broker/dealers are small businesses and their ability to service their clients is jeopardized by burdensome regulations; and last, but certainly not least, Congress should support H.R. 4618, the Compliance, Inspections and Examinations Restructuring Act of 2005. FSI members told lawmakers they support H.R. 4618--which was introduced by Rep. Vito Fossella (R-New York) in December 2005--because it would require the SEC, in FSI's words, to "make important changes to its examination and enforcement processes, resulting in more effective regulation without piling on more burdens, particularly for independent advisors."
Before taking their messages to the Hill, FSI members got to hear what's on the mind of regulators these days. SEC Commissioner Annette Nazareth was on hand to tell FSI members that the SEC will continue to focus on three troublesome areas--inappropriate sales of variable annuities, suitability issues surrounding 529 college savings plans, and sales of "complex" products to seniors. James Ropp, the Delaware Securities Commissioner, told attendees that the states, too, are scrutinizing the sales of complex products to seniors, mentioning in particular sales of equity-indexed annuities. "From what I've seen," he said, "every contract is different," noting differences in terms and participation rates.
In the area of taxes, Robert Carroll, Deputy Assistant Secretary of the Treasury, who works in the Office of Tax Policy, told FSI members that Treasury continues to work on tax reform. He noted specific areas that are motivating Treasury to revamp the tax code. The tax system is too complex, he said, and creates compliance burdens. He cited IRS data which found that consumers spend $140 billion per year to pay for taxes--that includes getting help to understand the tax system as well as paying for tax preparation services. The "poster child" of tax reform is the Alternative Minimum Tax (AMT), Carroll said, "Which is a good example of a government program gone astray." Yet another motivator for tax reform, he said, is the "economic drag that taxes place on the economy."
Washington Bureau Chief Melanie Waddell can be reached at email@example.com.