From the August 2010 issue of Investment Advisor • Subscribe!

Advice to the SEC

Sidebar to the article "Finding Their voice"

More On Legal & Compliance

from The Advisor's Professional Library
  • 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.   
  • Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm.  States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.

When it comes to the fiduciary standard, and the six-month study that the SEC will conduct to determine whether brokers should be held to such a standard, Capital Analysts President and CEO Matt Lynch says advisors "want to be sure the SEC seeks and gathers input from the industry as to how to implement these important changes.

"I've been involved in a number of meetings with the SEC and FINRA, and I've said I think there is a difference between disclosure and transparency, [and] that ultimately what [the SEC] should be doing is making it easier for the investor to understand the nature of the relationship between themselves and the advisor--including how the advisor is paid, who's paying him, and where any conflicts of interests may exist. I believe a different way of providing that financial literacy to the client would be important to add to the SEC regulations. My concerns would be that the SEC produce guidance subject to interpretation but doesn't really give the industry enough information to take action. I think changing the way we communicate with clients would be a good thing."

Return to "Broker/Dealer Marketing: Finding Their Voice."

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