RIABiz

News, Vision & Voice for the Advisory Community

RIABiz

RIA Compliance

The past two years have been some of the most momentous in the relatively short history of the RIA profession. Legislators and regulators have been gradually embracing the fiduciary standard, though whether it will fully apply to everyone calling themselves advisors remains to be seen.

The Department of Labor’s crusade to lower costs and increase transparency in retirement plans means a spate of new regulations affecting advisors and brokers in that market. Dodd-Frank Financial Reform, meanwhile, continues to unroll across the profession, with the biggest change being a shift to state oversight of RIAs with less than $100 million AUM. In this section, you’ll find continually updated RIABiz.com coverage on all these topics.


Jeff Levine:  Do we have the skillset necessary to provide same-sex couples the sort specialized planning advice they’d need?
Jeff Levine: Do we have the skillset necessary to provide same-sex couples the sort specialized planning advice they’d need?

Thomas became second Supreme Court Justice to lament the loss of state control over marriage, casting a shadow over RIAs who long struggled with a potential 50 sets of rules to help gay couples plan a life together.

Friday, August 26, 2022 – 1:56 AM by Oisin Breen

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A Supreme Court Justice struck a nerve in the RIA world -- and set off an RIA Twitter wildfire -- with an implicit threat to burn down the fragile bridge between RIAs and their LGBTQ+ clients.

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William Galvin: Vanguard’s deliberate decision [benefited] ultra-wealthy shareholders over main street investors.
William Galvin: Vanguard’s deliberate decision [benefited] ultra-wealthy shareholders over main street investors.

The William Galvin-driven settlement covers the state's legal fees and sets up restitution fund and a state pay-out, but a pending Pennsylvania lawsuit is likely the first of many to follow.

Friday, July 8, 2022 – 2:22 AM by Oisin Breen

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Brooke's Note: This week we learned Schwab will appease the SEC with $187 million. It took Vanguard all of $6.25 million. But you might just get what you pay for. Schwab is now well and truly out of the woods. Vanguard will have to wait ...

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Louis Harvey: 'Schwab could elevate its robo to be a true fiduciary.'
Louis Harvey: 'Schwab could elevate its robo to be a true fiduciary.'

Federal regulators claimed Schwab pre-set client cash allocations without making proper disclosures to Schwab Intelligent Portfolios clients.

Thursday, July 7, 2022 – 12:10 AM by Lisa Shidler

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Charles Schwab & Co. is paying the Securities and Exchange Commission (SEC) $187 million -- if not officially in penance-- for alleged transgressions that put its own interests ahead of its robo clients.

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Ari Sonneberg: I think Grayscale will be hard pressed to find much sympathy, let alone support, from the general public.
Ari Sonneberg: I think Grayscale will be hard pressed to find much sympathy, let alone support, from the general public.

The 'hard-pressed' Stamford, Conn., crypto fund manager calls the SEC's rebuff 'capricous' but with cryptocurrencies in freefall, the SEC can say I told you so -- even if its logic is inconsistent and questionable.

Friday, July 1, 2022 – 7:06 PM by Brooke Southall

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Brooke's Note: Hope sprung eternal when Gary Gensler ascended as commissioner of the Securities and Exchange Commission (SEC). He had made favorable remarks about cryptocurrency during his time at MIT. But now bitcoin enthusiasts largely view him as a crypto ogre lurking under the bridge determined to ...

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Larry Fink: It's just a number.
Larry Fink: It's just a number.

After record AUM high, BlackRock chairman and CEO Larry Fink brushes off a milestone • SchwabSchwab hits records; Wall Street wants more • Mutual fund giant's ETF conversion yields bragging rights • Regulation Best Interest headaches unnecessary, despite SEC brouhaha, lawyers say • Workplace scheme wins big for Fidelity.

Friday, January 21, 2022 – 3:16 AM by Oisin Breen

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BlackRock's AUM tops $10 trillion -- "It's just a number," says CEO Larry Fink with likely a nod and a wink.

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Ari Sonneberg: 'Why [did] the punishment stop short of a penalty with real teeth that would objectively prevent this from recurring?'
Ari Sonneberg: 'Why [did] the punishment stop short of a penalty with real teeth that would objectively prevent this from recurring?'

Federal regulators allowed McKinsey to settle without admitting insider trading violations for its in-house RIA but censured the firm and ordered it to 'cease and desist' from future violations.

Tuesday, December 21, 2021 – 11:54 PM by Oisin Breen

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Brooke's Note: The easiest way for an RIA to get in trouble with the SEC is to make a compliance plan and then not follow it. McKinsey Investment Office Partners did not make that mistake. When it came to addressing the fact that the $31-billion RIA had ...

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Eric Clarke: There’s not one feature of [BasisCode's] platform that an RIA doesn’t need or use.
Eric Clarke: There’s not one feature of [BasisCode's] platform that an RIA doesn’t need or use.

Orion CEO Eric Clarke purchase builds on a strategy of developing a data capability that helps his firm keep RIAs compliant and win enterprise deals head-to-head against Envestnet-Yodlee.

Saturday, November 13, 2021 – 3:38 AM by Oisin Breen

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Brooke's Note: It's almost hard to name a successful software company today that isn't succeeding because it has great sources of data and the ability to spin that straw into gold. Nobody in the RIA business has it nailed. Envestnet bought a big, fancy asset ...

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Gary Gensler: There’s a reason why the ’33 Act was called the Truth in Securities Law.
Gary Gensler: There’s a reason why the ’33 Act was called the Truth in Securities Law.

Thousands of clients may be getting lost in the shuffle in the face of strong inorganic RIA growth -- an obscure problem until federal regulators gave Regal Investment Advisors the royal treatment, in part, for charging full fees and failing to disclose reduced service.

Tuesday, October 26, 2021 – 7:39 PM by Oisin Breen

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Brooke's Note: One reason people don't like doing business with large corporations is that so much can slip between the cracks. Consumers end up becoming their own watchdog. The giant cracks at wirehouses allowed the RIA business to spring up starting in the early 1990s. But now, the ...

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Michael Kitces:  "If you're going to be a hybrid broker/advisor, you can't market that you're an advisor - and then swerve into being a broker."
Michael Kitces: "If you're going to be a hybrid broker/advisor, you can't market that you're an advisor - and then swerve into being a broker."

The XPYN founder wants the SEC to honor its 'Merrill Lynch Rule' promise from 15 years ago, demanding the most fundamental truth in advertising.

Friday, October 1, 2021 – 10:33 PM by Lisa Shider

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Michael Kitces is challenging federal regulators to out nerd him by demanding closure of a long-recognized loophole that could throw for a loop the world of financial product commission sales.

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Rick Fleming: 'While these typically were characterized as efforts to “modernize” or “streamline” regulations, they often had the effect of diminishing investor protections.'
Rick Fleming: 'While these typically were characterized as efforts to “modernize” or “streamline” regulations, they often had the effect of diminishing investor protections.'

The federal regulator did Wall Street's bidding and lost its compass, according to a damning Securities and Exchange Commission document.

Wednesday, December 30, 2020 – 2:07 AM by Brooke Southall

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The federal agency responsible for acting as a watchdog over stock markets allowed market manipulators and stonewalling corporations tremendous leeway to abuse their faith and their cash to their own ends then couch it as advancement.

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David Mannaioni:  Many clients in passive portfolios still bailed on the market in the COVID decline this spring only to miss out on the recovery this summer.
David Mannaioni: Many clients in passive portfolios still bailed on the market in the COVID decline this spring only to miss out on the recovery this summer.

After Covid-19 chased investors out of the market at the exact wrong time, the Kaplan-owned company made its move to advance managing emotions as a sanctioned skill in financial planning -- despite too many letters in the alphabet soup already

Wednesday, November 25, 2020 – 1:40 AM by Lisa Shidler

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Brooke's Note: We've come to this: The financial advice industry will now have an accredited course of instruction aimed at teaching advisors how to advise clients to accept their financial advice. Yes, allow yourself a chuckle for that inherent admission about just how futile the ...

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Baiju Bhatt (left) and Vladimir Tenev (right) founded Robinhood in 2013. Now the firm's DIY model is challenged by a suit alleging its duty of care is not just skin deep.
Baiju Bhatt (left) and Vladimir Tenev (right) founded Robinhood in 2013. Now the firm's DIY model is challenged by a suit alleging its duty of care is not just skin deep.

Three Florida firms sue claiming (IPO bound, Bloomberg reports) Robinhood allegedly failed to direct self-directed investors -- a claim that is both legally shaky, and potentially serious, experts say.

Tuesday, November 17, 2020 – 4:54 AM by Oisin Breen

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Brooke's Note: There are lots of things you can disclaim but still get sued over. Ski resort operators and tobacco companies know this. But does that mean a broker who claims no due care to investors can be sued when it shows that it really means ...

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Brian Hamburger: Cutting out free lunches doesn't end the conflicts.
Brian Hamburger: Cutting out free lunches doesn't end the conflicts.

In a world where RIAs often accept lunches from a wholesalers, the New York wirehouse's out-of-the-blue change of heart has the lawyer saying it looks more like a way of bolstering its position as the intermediary

Thursday, September 10, 2020 – 3:33 AM by Lisa Shidler

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Brooke's Note: When you're big, powerful and well-branded the game is always about perception. Free lunches can be perceived badly. Merrill Lynch itself uses the word "perception" to explain its abrupt but belated decision to find that such a perception exists. The timing and explanation ...

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Aron Szapiro: The Department of Labor’s approach is out of step.
Aron Szapiro: The Department of Labor’s approach is out of step.

The Department of Labor good-is-bad rulemaking clashes with the take of most Americans in 2020, who don't buy its investing logic, legal theory or take on humanity.

Thursday, August 20, 2020 – 10:32 PM by Brooke Southall

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Brooke's Note: The DOL could theoretically make a good case for banning ESG filters from the pension, DC and DB assets that it oversees. Namely, it could say squishy beliefs have no place in long- or short-term investment portfolios. Let the market be the market. The problem is the ...

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Clara Shih: It’s about being able to connect with the CRM system of record.
Clara Shih: It’s about being able to connect with the CRM system of record.

The CEO of the San Francisco robo-content curator already dominates market share, but now Hearsay is hoping CRM advisor data will make its robotics simulate human online interaction more convincingly.

Thursday, August 13, 2020 – 2:44 AM by Oisin Breen

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Projecting market power, Clara Shih got Salesforce to supply her firm, Hearsay Systems, with a pile of cash and its trove of advisor data, but competitors say the deal reveals Hearsay's vulnerability as much as its strength.

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