Compliance News

Alternative Facts Aren’t Acceptable on Form ADV

Using words and deeds, the SEC has made it abundantly clear that Form ADV disclosures must be thorough, complete, and truthful. These disclosures must also be consistent with a firm’s advisory contracts and business practices.

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DOL Confirms Fiduciary Rule Applicability Date of June 9th

On May 22, DOL Secretary Alexander Acosta announced that the components of the Fiduciary Rule scheduled to go into effect on June 9th will go effective on that date without further delay.

Effective June 9, 2017, advisers providing advice to traditional and defined contribution plans, such as 401(k) plans, as well as to plan participants and to those who save through IRAs, will be treated as fiduciaries under the Fiduciary Rule and have an obligation to adhere to “Impartial Conduct Standards”.

The Impartial Conduct Standards consist of three components:

  • Advice must be in the best interest of the client at the time the advice is given;
  • Compensation must be reasonable as described in section 408(b)2 of ERISA; and
  • Statements about recommended investments, fees & compensation, material conflicts of interest, and any other relevant matters are not misleading at the time they are made.

NCS Regulatory Compliance has made available a Rollover Suitability Form to assist firms with complying with the Impartial Conduct Standards, which is found in the Library of NCS-Connect (under DOL Fiduciary Rule).  Compliance with the remaining conditions in the exemptions provided under the Rule (including the Best Interest Contract exemption), such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors, are not required until Jan. 1, 2018.

Although written policies and procedures are not required under the Rule for most RIAs, NCS Regulatory Compliance recommends that RIAs impacted by the Rule adopt policies and procedures as a best practice to help ensure compliance with the Rule.  NCS Regulatory Compliance will be providing updates to ERISA policies and procedures to clients impacted by the Rule.  In the meantime, if you have specific questions or concerns relating to the Fiduciary Rule, please contact your NCS Regulatory Compliance Consultant.

The DOL will continue their review of the Fiduciary Rule beyond the June 9th effective date and the possibility remains that modifications could be adopted prior to the Rule’s full implementation on January 1, 2018.  We will continue to monitor the status of the DOL’s Fiduciary Rule and keep you informed of any developments.

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Robo-Advisers and Traditional RIAs Can Benefit from SEC Guidance

In February, 2017, the SEC provided guidance regarding robo-advisers, a term that refers to an automated digital investment advisory program. The guidance is important to all Registered Investment Advisers (“RIAs”), even if they are not incorporating a digital platform in their business model.

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