How can investment advisors minimize regulatory risk?

The following list is the North American Securities Administrators Association’s (NASAA) recommendations for the best practices that investment advisers should consider to minimize regulatory violations.

• Review and revise Form ADV and disclosure brochure annually to reflect current and accurate information.
• Review and update all contracts.
• Prepare and maintain all required records, including financial records.
• Back-up electronic data and protect records.
• Document all forwarded checks.
• Prepare and maintain client profiles.
• Prepare a written compliance and supervisory procedures manual relevant to the type of business, including a business continuity plan.
• Prepare and distribute a privacy policy initially and annually.
• Keep accurate financials. File on time with the jurisdiction.
• Maintain surety bond if required.
• Calculate and document fees correctly in accordance with contracts and ADV.
• Review all advertisements, including website and performance advertising, for accuracy.
• Implement appropriate custody safeguards, if applicable.
• Review solicitor agreements, disclosure and delivery procedures.