Our Consultants Rely on Decades of Experience to Provide Comprehensive RIA Compliance Services Nationwide
RIA Compliance Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)
Registered investment advisors (RIAs) are subject to extensive legal and regulatory requirements. To protect themselves—and to protect their finances and their careers—RIAs need to make legal and regulatory compliance a priority.
We assist RIAs and RIA firms nationwide with all aspects of compliance. Unlike others, we do not provide off-the-shelf RIA compliance products or generic compliance recommendations. All of our RIA compliance services are fully custom-tailored, and our expert consultants work alongside our clients to ensure that they have a clear understanding of what they need to do (and what they need to avoid doing) when managing their businesses and servicing their customers.
What Do RIAs Need to Know About Compliance?
Simply put, when it comes to compliance, there is a lot that RIAs need to know. For those who are making their first foray into the compliance arena, simply knowing where to start can prove challenging. With this in mind, here are some of the key aspects of compliance of which all RIAs should be aware:
1. Investment Advisers Act of 1940
The Investment Advisers Act of 1940 is the primary law that governs registered investment advisors’ interactions with their customers. This federal law establishes various rules, restrictions, and requirements, and it gives the U.S. Securities and Exchange Commission (SEC) oversight of the investment advisory industry.
When developing an RIA compliance program, the Investment Advisers Act of 1940 is the starting point. With a firm foundation in place, RIAs and their consultants can work together to craft tailored policies, protocols, and strategies designed to facilitate day-to-day compliance.
2. Other Applicable Laws and Regulations
While the Investment Advisers Act of 1940 is the starting point, it is ultimately just one of several laws, regulations, and rules with which RIAs and RIA firms must comply. From the Dodd-Frank Act of 2010 to the SEC’s Regulation Best Interest (“Reg BI”) which took effect in 2020, RIAs and RIA firms must address many other sources of authority when developing their compliance programs as well.
3. U.S. Securities and Exchange Commission (SEC) Oversight
The SEC is the primary federal agency responsible for protecting the securities markets in the United States. In addition to having oversight of publicly-traded and privately-held companies, the SEC also has oversight of RIAs and RIA firms. The SEC regularly targets registered investment advisors and firms for compliance violations, and it has the ability to pursue administrative, civil, and criminal enforcement actions as warranted.
4. Financial Industry Regulatory Authority (FINRA) Oversight
Registered investment advisors and RIA firms that offer broker-dealer services are also subject to the oversight of the Financial Industry Regulatory Authority (FINRA). FINRA is a quasi-governmental entity that has adopted its own set of Rules governing the brokerage industry. From ethical considerations to disclosures, recordkeeping, and supervisory authority, FINRA’s Rules establish broad compliance obligations as well, and RIA/broker-dealers that fail to meet these obligations can face suspension, debarment, and other administrative penalties along with the possibility of civil liability.
5. Form ADV
As the SEC explains, “Form ADV is the uniform form used by investment advisers to register with both the SEC and state securities authorities.” While most RIAs are familiar with Form ADV, in our experience relatively few have a clear understanding of the form’s implications and what they can—and should—be doing to minimize their risk of triggering SEC scrutiny when they file.
How Do We Help with RIA Compliance?
We simplify the process of RIA compliance. While registered investment advisors’ statutory and regulatory obligations are extraordinarily complicated, maintaining compliance doesn’t have to be. An effective compliance program can—and should—be simple and straightforward, and it should make it easy for RIAs to avoid mistakes that are likely to trigger SEC or FINRA scrutiny.
With this in mind, our RIA compliance offerings include:
1. Compliance Policies and Procedures
We help our RIA clients develop and implement comprehensive compliance policies and procedures. Our programs address all aspects of RIA compliance at the state and federal levels, as well as FINRA’s Rules for broker-dealers. Beyond simply developing policies and procedures as deliverables, we provide implementation and training services as well—working alongside our RIA clients to ensure that they feel confident managing their compliance burdens going forward.
2. RIA Registration
With only limited exceptions, RIAs and RIA firms must maintain registration with the SEC in order to serve their customers. State-level registration is required in many instances as well. Once our clients have effective compliance programs in place, we guide our clients through the initial registration process—and then we continue working alongside our clients to ensure that they are able to remain registered on an ongoing basis.
3. Chief Compliance Officer Appointments and Training
For RIA firms, appointing a Chief Compliance Officer (CCO) is a key element of compliance management. Not only is this an effective way to manage RIA compliance, but the SEC expects to see that RIA firms have CCOs on their executive teams. The selection of a CCO is an important process that RIA firms should not take lightly; and, during the onboarding process, CCOs should receive in-depth training on firms’ unique compliance policies and procedures.
4. Anti-Money Laundering (AML) Compliance
Anti-money laundering (AML) compliance is a key area of RIA compliance that has taken on a heightened profile in recent years. The SEC and other federal authorities expect RIA firms to have comprehensive AML safeguards in place; and, when contacted in connection with AML investigations, RIA firms must be able to affirmatively demonstrate their commitment to preventing and uncovering unlawful transactions.
5. Tools and Resources for Ongoing RIA Compliance
Effective RIA compliance management requires a suite of up-to-date tools and resources. We provide our RIA clients with everything they need to manage their compliance programs with confidence. Our consultants also continue to work alongside our clients as needed, regularly assisting with matters such as:
- Annual Compliance Audits and Risk Assessments
- Contract Reviews
- Correspondence and Transaction Reviews
- Customer Complaint Response Procedures
- Marketing Compliance Reviews
- Political Contribution and Gift Reviews
- Portfolio Management Reviews
- Soft Dollar Reviews
- Supervisory Reviews
- Trade Surveillance Reviews
In addition to these client services, our RIA compliance consultants monitor for updates to the pertinent laws and regulations, and we advise our clients regarding new and modified compliance obligations as necessary. By taking this proactive approach, we are able to help our clients avoid many of the issues that lead to trouble for RIAs and RIA firms working with other outside compliance consultants.
Put our highly experienced team on your side
Roger Bach
Former Special Agent (OIG)
Timothy E. Allen
Former Senior Special Agent U.S. Secret Service
Chris J. Quick
Former Special Agent (FBI & IRS-CI)
Maura Kelley
Former Special Agent (FBI)
Ray Yuen
Former Supervisory Special Agent (FBI)
Michael S. Koslow
Former Supervisory Special Agent (DOD-OIG)
Marquis D. Pickett
Special Agent U.S. Secret Service (ret.)
FAQs: Avoiding SEC (and FINRA) Scrutiny Through Effective RIA Compliance
How Can RIAs Assess Their Compliance?
When it comes to compliance, RIAs cannot afford to make assumptions or uninformed decisions. To assess their compliance, RIAs can engage an outside consulting firm to conduct an independent compliance assessment. A firm with consultants who are experienced not only in RIA compliance, but in AML compliance and other pertinent areas as well, will be able to provide a comprehensive assessment of an RIA’s overall risk exposure.
What Authorities Enforce RIA Compliance?
The SEC is the primary federal authority responsible for enforcing RIA compliance. State securities regulators have oversight of RIAs as well. In many cases, the SEC will work alongside these state authorities (and the U.S. Department of Justice (DOJ) and other federal law enforcement agencies) when investigating RIAs and RIA firms for suspected compliance violations.
What Are the Risks of Non-Compliance for RIAs and RIA Firms?
For RIAs and RIA firms, the risks of non-compliance can be substantial. In administrative enforcement proceedings, the SEC can impose substantial fines along with registration-related sanctions. FINRA can debar RIA/broker-dealers as well. In civil and criminal cases, the consequences of facing enforcement action can be far more severe—including possible imprisonment for RIAs accused of criminal misconduct.
Do All RIAs Need a Compliance Officer?
It is highly recommended that all RIAs have a compliance officer. The SEC expects RIAs to employ a compliance officer who holds day-to-day responsibility for managing, monitoring, and enforcing their compliance policies and procedures. For smaller firms, it is possible to have an existing RIA or executive serve in this role, though it should be clear that this individual has time devoted specifically to managing the firm’s compliance program.
Do RIAs Need to Engage an Outside Consulting Firm for Compliance?
Given the challenges of managing RIA compliance, it is also highly recommended that RIA firms engage outside consulting firms to assist them. A firm with a team of experienced consultants will be able to provide efficient advice that ultimately saves resources while mitigating the risk of facing unwanted SEC (and FINRA) scrutiny.
Talk To a Senior RIA Compliance Consultant To Learn More
If you need to know more about RIA compliance, we invite you to contact us for a complimentary initial consultation. We work with individual RIAs and RIA firms of all sizes nationwide. To speak with a senior RIA compliance consultant in confidence, please call 866-352-9324 or tell us how we can help online today.