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December 20, 2010 at 11:07 AM
Fidelity Investments is scheduling a series of webinars and regional workshops in 2011 to help its registered investment advisor clients who are worried about complying with the Securities and Exchange Commission’s latest regulatory changes.
RIAs are attending Fidelity’s courses in record numbers to receive assistance from third-party experts such as lawyers and compliance consultants on such regulatory puzzles as how to answer Form ADV Part 2 and cost-basis reporting changes.
Boston-based Fidelity, with assets under administration of over $3.3 trillion as of Oct. 31 including managed assets of over $1.5 trillion, alerts clients to upcoming regulatory courses via its Insight & Outlook market-intelligence service on RIA platforms.
The SEC’s Form ADV Part 2, a 26-page form requiring 10.6 hours of “estimated average burden hours per response,” has been an area of particular concern. In the form, advisors have to describe the services they offer and be prepared to provide it to any client who asks. Starting next year, advisors are required to draft a new, more narrative brochure that describes their business practices, conflicts of interest and a background of their advisory personnel. They are also required to post the form to their website and update it at least annually.
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at we’re finding is that with ADV Part 2, most clients are going to have to spend a significant amount of time in the first quarter to undergo the transition from what they were used to with ADV Part 2 to the new format, which is a narrative brochure,” said David Canter (left), executive vice president and head of practice management at Fidelity's RIA custody business. “Whenever you leave things open to interpretation, that creates uncertainty, especially when you’re dealing with a regulatory filing.”
But Fidelity is hearing from RIAs that they’re not just worried about Form ADV.
“The whole year of 2011 appears to have looming regulatory changes for advisors,” Canter said.
For example, he pointed to the Dodd-Frank reform bill’s requirement for advisors with $25 million to $100 million in assets under management to undergo a transition from federal to state registration. Beginning next year, 4,000 advisors who have under $100 million in assets will need to switch their ADV registration from the SEC to oversight by the states in which they do business. In many cases, advisors have clients across multiple states.
