Advisory Contracts

Assess LIBOR Exposure in Preparation for Shift

Advisory firms need to prepare for the financial communitys coming switch from the London Interbank Offered Rate (LIBOR) as the most commonly used interest rate benchmarks. Those who think of the benchmark situation as a problem affecting primarily banks are likely to be in for a rude shock, as many portfolios and financial contracts may be affected by it.

Advisory Firm Fees: What the Future May Hold

The world of advisory firm compensation is changing and will continue to change. The next five to 10 years may see discounts, alternative forms of compensation, clients making investments that do not involve fees at all, and more. Advisers that want to stay ahead of the curve will keep up to date and be prepared for any likely eventuality.

2018 in Review: Standards of Care, Cryptocurrencies, SEC Changes and More

With the past year almost over and a new one about to begin, its time to take a look back and take stock of what was accomplished in 2018 and what issues remain. The past 12 months found major developments involving standards of care for advisers and broker-dealers, the emergence of an SEC strategy regarding cryptocurrencies, a full year in office for a new SEC team and philosophy, the rising challenges of cybersecurity, and more.

Advisers Must Follow Through on Promised Advisory Fee Discounts

It may sound like an obvious point to make: If an advisory firm promises clients that they will receive fee discounts at certain breakpoints based on the amount of assets they turn over to the adviser for management, it must follow through and provide those discounts. However, if an advisory firm fails to implement procedures to make good on these promises, it may find itself both shortchanging clients and facing SEC sanctions.

Adviser Association Finds Recent Testing of Proposed Form CRS Flawed

The Investment Adviser Association is not happy with the recent testing of the SECs proposed Form CRS. In a December 6 statement, the IAA said that the testing of the relationship summary form, conducted by the Rand Corporation at the agencys behest, is substantially flawed and does not provide a reasonable basis for adopting Form CRS as proposed.

Form CRS: Investor Survey Finds Overall Satisfaction, but Improvements Needed

Form CRS, like a number of the SECs standards of care proposals, has run into significant industry criticism, but the Commission may take some satisfaction from a recent investor survey finding that nearly 90 percent of respondents said that the form would help them make more informed decisions about investment accounts and services.

Refund Unearned Advisory Fees as Contracts and Policies Stipulate

Advisory firms receiving requests from clients to refund their advisory fees need to do so on time and in accordance with their advisory contracts, policies and procedures, and other disclosures. Failure to do so, whatever the reason, may draw attention from SEC examiners and possibly the Division of Enforcement.

Third-Party Agreements: Ensure Clients Dont Get Burned by Conflicts of Interest

Advisers may see agreements with other advisory firms as a way to enhance revenue. While such third-party agreements may on their face bring in additional dollars, advisers should also take precautions that they dont create conflicts of interest with clients. When that happens, the agreements may bring in more than additional revenue - they may bring in SEC examiners and investigators.

Adviser and Broker-Dealer Issues Play Out in Latest Share Class Settlement

The SEC reached a settlement with a dually-registered advisory firm / broker-dealer that involves the issue of recommending higher-cost share classes of securities to clients when lower-cost share-classes of securities are available. This latest share-class settlement has an added wrinkle in that the firm may have had a conflict of interest because, in its capacity as a broker-dealer, it allegedly received the additional service fee from the purchase of the higher-cost shares.

IAA: Fiduciary Rule Definition Should Not Include Pre-Contract and Sales Discussions

Does the Department of Labor just not get it? Investment advisers are already fiduciaries, both under the Advisers Act and under ERISA - yet the DOLs Fiduciary Rule, as currently written, requires that advisers be fiduciaries not only after client contracts are signed, but during pre-contract and sales discussions. That is the view of the Investment Adviser Association, which, in an April 17 comment letter to the Department, makes clear that it wants that definition changed.

Audio Interviews

How to Read an SEC Enforcement Action

Stern Tannenbaum law firm partner Aegis Frumento on how to get the most from reading an SEC administrative order or court complaint.

Most Important Supreme Court Decisions for Advisers and Funds

Find out the high court decisions from recent years that are likely to affect how advisers and investment companies work from Debevoise partner Robert Kaplan. 

Top 10 Cybersecurity Steps to Take Now

Sutherland law firm partner Brian Rubin shares the most urgent cybersecurity steps for investment advisers.

Top Marketing Problems … and Solutions

Get solutions for the top marketing challenges that advisers face from ACA Compliance Group managing director Kimberly Daly

Watch Out for 5 Cybersecurity Myths

ACA Aponix Director Pascal Busnel on the most common cybersecurity myths that may cause firms to spend resources where they may not be needed.

The Hidden Costs of Non-Compliance

Proskauer law firm partner and former SEC Division of Investment Management deputy director Robert Plaze on why the costs of non-compliance go way beyond an SEC penalty.

CCO Liability: How to Protect Yourself

Find out from Blue Edge Capital CCO Margaret Fretz what chief compliance officers may be liable for and best practices to make sure you are protected.

Ethics or Compliance: Making the Choice

Find out the difference an ethics, rather than a compliance, perspective makes at an advisory firm from former Ethics and Compliance Officer Association COO Timothy Mazur.