More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
It's clear that advisors are worried about the impact of regulatory reform measures--specifically now that President Obama's blueprint (announced June 17 and available for download at InvestmentAdvisor.com) solidifies the Administration's plan to harmonize B/D and advisor rules and fiduciary standards for brokers. A recent survey of registered investment advisors by TD Ameritrade Institutional found that regulatory changes ranked as RIAs' top concern over the next 12 months. Fifty-six percent of the RIAs TD Ameritrade polled said that the greatest concern they had about pending regulatory reform was that they'd have to dedicate more time and money to meet compliance requirements. What's more, 83% of RIAs agreed that they would have to dedicate more of their time to handling new regulatory requirements, which would reduce their time with clients. Sixty-eight percent of RIAs said that they'd have to add resources to manage new regulatory requirements.
When queried on which fiduciary standard RIAs would support for their advisory business with individual investors, 36% said they support applying the fiduciary standard that applies to RIAs to broker/dealers; 29% supported adopting proposed Principles of Fair Dealing that emphasizes fair treatment of investors by applying the same core standards of care whether the firm is a financial planner, investment advisor, a securities broker/dealer or another financial services provider; and 25% voiced support for maintaining the current fiduciary standard for RIAs and the suitability standard for brokers.
TD Ameritrade surveyed 503 RIAs by telephone between May 14 and May 22, 2009.