The Securities and Exchange Commission’s exams of investment advisors and investment companies will “take a hit” this year due to the government shutdown and will “undoubtedly” not reach the record 17% exam level of 2018, Dan Kahl, deputy director of the SEC’s Office of Compliance Inspections and Examinations, said in early March.
Kahl, speaking at the IAWatch compliance event in Washington, also told advisors that OCIE will be “working on lots of risk alerts this year,” with a goal to “get as many out as we can.”
A near term alert will focus on Regulation SP and compliance policies, he said. “We’ve done a lot of exam work on Reg SP” and policies and procedures required by the reg, which is related to data security, and “found lots of deficiencies.”
Said Kahl: “I’m using the pulpit now to suggest that you take a look at your Reg SP” policies and procedures that address such things as confidentiality of client information.
Regarding digital assets, which Kahl said “may be touching” some RIA firms, OCIE started a few initiatives last year that will continue this year, and plans a “more in-depth approach this year to get a sense of what’s happening in your shops.”
He noted the digital assets initiative launched by the agency last year to “get a lay of the land” in the advisor space. “We didn’t find much. We found some dalliance” in digital assets by private funds. However, “there’s lots of interest from clients.”
This year, Kahl continued, “we’re going to continue to essentially survey to keep our pulse on digital assets” and advisor accounts.
In terms of senior investors, OCIE will continue to focus on fees and expenses, according to Kahl: “We are very frequently finding problems, not necessarily a fraudulent area, but it’s lack of controls, lack of attention to your billing practices.”
Other areas of focus regarding senior and retail investors include rollovers, recommendations, fund selection, share classes and breakpoints, he said.
Other Developments TD Ameritrade Institutional recently announced plans to boost services to emerging advisory firms: expanding its educational offerings, hosting more learning events and dedicating teams of technology and business consultants to help emerging advisory firms grow more rapidly.
“Firms with less than $100 million in assets tend to have a flatter organization structure, which means they can be more agile and responsive to changing client needs and preferences,” according to Janelle Ward, head of TD Ameritrade Institutional’s emerging advisor accelerator group.
“This enables emerging firms to make decisions on big changes like technology, marketing strategy and client experience faster than their more established peer,” she explained.
These up and coming firms also are hungry for knowledge that helps them grow, and so we see high demand for curated content and engagement with our consultants.”
The latest enhancement is the Education Center’s Emerging Advisors Learning Path, which lays out a series of courses tailored for emerging advisors, such as getting started with technology, growing the business, an in-depth look at TD Ameritrade’s offerings, and research and benchmarking.
Soon, TD Ameritrade Institutional will bring this education and consulting support together through an interactive digital roadmap, an online tool that will provide RIAs easy access to the firm’s suite of tech, practice management and education offerings.