From the August 2013 issue of Investment Advisor • Subscribe!

RIAs’ Top Compliance Goal: Social Media Policies

More On Legal & Compliance

from 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.
  • U.S. Securities and Exchange Commission Information This information sheet contains general information about certain provisions of the Investment Advisers Act of 1940 and selected rules under the Adviser’s Act.  It also provides information about the resources available from the SEC to help advisors understand and comply with these laws and rules.

Advisors are honing their social-media savvy, with nearly 83% of firms adopting formal social media policies this year—up from 64% in 2011 and nearly double the 43% of advisors who had such policies in 2010, according to a recently released compliance survey by the Investment Adviser Association, ACA Compliance Group and Old Mutual Asset Management.

The online survey of 462 registered investment advisors, performed from April 18 to May 17, also found that fewer firms (49%) are prohibiting the use of social media sites for business purposes, down from 54% in 2012. Forty-three percent reported that their social media testing has increased in the past year.

Since last year’s survey, compliance testing has increased the most in the areas of advertising and marketing, personal trading, disaster recovery planning and political contributions/pay to play, with 79% of firms indicating that they have not decreased compliance testing in any area, the survey found.

As to the chief compliance officer role, 99% of firms reported that they do not outsource the CCO role, while 63% said their CCO is wearing two or more hats. Thirty-two percent of the firms polled reported having only one person in a full-time legal/compliance role, while 68% of firms reported that their CCO is a senior executive in the firm.

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Read about other compliance issues that will affect advisors soon in Melanie Waddell's accompanying article, "Compliance Matters."

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