A Registered Investment Advisor (RIA) has the responsibility to follow compliance regulations; this includes protecting client privacy, keeping clear records, and navigating potential conflicts of interest. A regulatory consulting company helps an RIA firm adhere to compliance standards to prevent potential issues. Here is more information about maximizing RIA compliance services for optimal functionality:
Compliance Program Establishment
A team from a regulatory consulting company is able to help establish or support a compliance program for an RIA firm. This helps streamline the process. Some consulting companies allow firms to hire a Chief Compliance Officer (CCO) to provide RIA compliance services; they help with the planning, drafting, and implementing process. Outsourcing this role offers an alternative to hiring a full-time position. The CCO helps draft compliance manuals for the firm to follow and supports the adoption of written procedures.Â
CCOs offer ongoing support with day-to-day services, including regular updates to compliance manuals. They provide supervision and monitoring services; this includes checking policies and making sure the company is collecting the required disclosures. A CCO also approves advertising to make sure that the information is accurate.Â
SEC Registration Assistance
If an RIA has $100 million or more in assets under management, they register with the Securities and Exchange Commission (SEC). A regulatory consultant team and CCO help streamline the registration process by making sure registration documents are completed accurately and on time. They help with creating and completing the Form ADV documents and drafting the different policies for a compliance framework; these include the BCP, Insider Trading Policy, and the Code of Ethics.Â
Applications sent to the SEC can be approved within 45 days, and having a CCO manage the process helps prevent additional delays. They are also able to respond to follow-up inquiries on behalf of the firm. After the registration is approved, the CCO makes sure the RIA remains compliant with SEC regulatory requirements. They also inform the firm about any changes in regulations. To keep the internal team informed, some CCOs host training meetings on compliance topics.
File Management
A CCO can help with an RIA’s file management, preparing and submitting required forms. This helps prevent fiduciary penalties, delays, and other regulatory issues from missing deadlines. A CCO makes the appropriate yearly amendments to Form ADV Parts 1 and 2. They also deliver the updated Form ADV Part 2 within the required timeframe of 120 days after the end of the fiduciary year. CCOs prepare Section 13 and state notice filings, and they create a compliance calendar and timeline to help meet compliance deadlines and complete required activities.
Exam and Review Services
RIA compliance requirements include a 206(4)-7 annual review. Working with a regulatory consulting team that offers customized review procedures allows the firm to remain aligned with regulatory standards. These reviews are risk-based, and they allow the team to identify potential compliance gaps.Â
A customized review scope includes the results from previous regulatory reviews to determine how to address the gaps. During risk assessment, the team may check to see whether the RIA is following custody practices and policies to protect client information and assets. Reviewing pricing helps the team determine whether client fees are accurate and transparent. The team also checks to make sure that company bookkeeping is transparent, sampling these records to test compliance, and they test asset allocation.Â
During the review, the team also performs personnel interviews and identifies any inconsistencies with policies. The exit interview process and the final report provide information on any findings and specific recommendations in areas that need improvement. Some teams also provide mock examinations; these mimic audits performed by the SEC and other regulators. This helps prepare the firm for the examination process and allows the RIA to address compliance issues before the formal exam.Â
Explore RIA Compliance Services
Working with an experienced regulatory consulting team that offers CCO services helps with both establishing and running an effective compliance program. Some companies also provide cybersecurity services to help the firm protect client information and assets more effectively. A CCO from one of these companies provides oversight of third-party relationships, and they can head compliance committee meetings. To learn more about RIA compliance services, look for a regulatory consulting company today.
