More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- 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.
Securities attorneys and compliance officers often recommend advisors use a formal investment policy statement with clients to help define what an advisor will provide to an individual client in terms of an investing plan, with benefits to both the advisor’s firm in terms of liability and the clients themselves. On Monday, Commonwealth Financial Network announced it would offer to its affiliated representatives IPS AdvisorPro’s investment policy statement (IPS) software, which allows for the creation of compliant IPS statements that integrate with MoneyGuidePro financial planning and Redtail CRM software.
In a statement, Commonwealth Financial’s VP of wealth management, Gavin Morrissey (left), said that IPS AdvisorPro, founded by noted advisors Norm Boone and Linda Lubitz Boone, provides “sufficient flexibility in the investment process to capture opportunities, while helping to ensure that prudence and care are maintained in the execution of the statements.” (Morrissey is a regular blogger for AdvisorOne; see his most recent posting.)
"Investment policy statements are not only a prudent best practice in private wealth management, but they are critical to relationship management, as well as an effective marketing tool," continued Morrissey.
A Commonwealth spokesperson said Commonwealth advisors will receive preferred pricing on their subscriptions to IPS AdvisorPro, and that integration with MoneyGuidePro and Redtail came in response to requests by Commonwealth advisors.
In addition to that integration, Commonwealth said IPS AdvisorPro subscriptions provide:
- Eight client-type IPS templates, with corresponding questionnaires to gather data for inclusion in the statement
- The ability to create an unlimited number of additional templates
- Thirty-three asset classes with which to create unlimited asset allocation models, each with historical return and standard deviation data
- A risk tolerance questionnaire that scores responses using an algorithm
(Read an archived feature story on Norm Boone and Linda Lubitz Boone's personal and professional lives from the archives of Investment Advisor.)