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.
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
The head of Raymond James (RJF) Private Client Group gave a fairly positive assessment of the state of regulatory affairs for advisors Tuesday morning. Speaking directly after former President George W. Bush at the independent-advisor annual conference, being held this week near Dallas, Chet Helck acknowledged that he’d “never had such a tough act to follow.”
“As you heard from President Bush, leadership is about setting a course and balancing issues,” said Helck, “which is what you do as advisors.” (About 1,600 Raymond James independent advisors and 1,800 advisors are attending the event.)
Acknowledging that regulatory updates can get both “boring and depressing,” the Global PCG CEO insisted that his desire “was to do neither.” Helck joked that he’d been “the recruiting guy” and “the technology guy” at Raymond James before becoming “the regulatory guy.”
His began his remarks by discussing tax reforms that are targeting independent contractors. “We’ve been fighting this for 20 years,” Helck said.
With about $800 billion in tax revenue at stake, he explained, the government is most interested in reforms that affect drivers with FedEx and programmers for Microsoft, for instance. “Our industry trade associations are working the issue, and so far are winning the battle.”
Future legislative action in this area, he noted, would allow for an exception, or carve-out, so financial advisors would not be affected by a tax change. Some key politicians are amenable to this, according to Helck (right), since advisors can show that they are “following the rules and paying taxes.”
“I’m fairly comfortable on this one,” the Raymond James executive said. “We must stay vigilant, but it’s not the biggest worry we have.”
Other Tax Issues
As governments around the world look to find new sources of revenue, financial-service transactions also have become a keen focus for possible tax reform. Some states, like Ohio, have even put it into their recent budgets, Helck said.
Advisors and professional groups such as the Securities Industry and Financial Markets Association, which Helck now chairs, put “boots on the ground.”
“That [measure] has been withdrawn in Ohio,” he said, drawing an applause from the audience. “Minnesota also should be OK as trade associations have been active there.”
Fiduciary Standard, DOL Action
The Dodd-Frank overhaul of the financial sector calls for advisors and other financial professionals to be evaluated by a “consistently high standard” that ensures the public trust, Helck says, and suggested standards and protections have produced some 70 pages of advisor feedback so far.
“We are not clear where it’s going, but we are at table” for you, the Raymond James executive said.
A more distressing issue, he notes, is the Department of Labor’s move to raise the fiduciary standard for retirement plans, including IRAs, while also pushing for more disclosure requirements and lower costs for investors.
Industry groups would like Congress to ask the DOL to consult with the SEC, so there’s a consistent standard of regulation concerning financial professionals and their client accounts.
“The Department of Agriculture funds DOL, and we want them to unfund” its latest proposals, says Helck, who said he once worked for a tractor company and didn’t expect to be dealing with agricultural regulators in his role at Raymond James.
“It going to take more time for these regulatory issues to get settled, of course,” he added, “and it seems like I’ve been talking about them for years.”
Since, it can take a decade or more after a financial crisis for new rules to get sorted out, “We have a long way to go,” the private-client operations had explained. “What comes out of this will drive how you do business for the rest of your life, so it’s important for you to stay involved.”
Read Raymond James IBD Kicks Off Big Texas Confab on AdvisorOne.