Heading Into the Busy Season: What to Keep in Mind
As regulators begin their annual visits, financial services compliance professionals can ensure they’ve made updates and met regulatory requirements
Red Oak 3 min read
The busy season is winding up. Beyond the usual routine, there’s a lot to think about and a lot that can create volatility in our business routines, including the price of oil and the rising costs associated with inflation.
Even though change continues to happen all around us, one thing stays the same. It’s the commitment of regulators to ensure we’re doing right by our clients and abiding by all the necessary compliance guidelines.
If you’ve been busy, hectic, or distracted, we have a brief checklist that might help you make it through the following few deadlines with ease:
Annual ADV Amendment Filing
The annually amended ADV, or material changes and offer of the ADV, needs to be delivered to all clients by April 30, 2022.
Changes to Form CRS
If there were any material changes to the Form CRS, that document needs to be amended and filed with the amended ADV and sent to all clients along with the ADV.
When sending the Form CRS to clients, keep in mind that presentation matters. If you send it along with other documents, the Form CRS must be the first document in the stack or the first PDF if it’s being sent electronically.
Modernized Marketing Rule
The SEC will begin enforcement of the new Modernized Marketing Rule. Keep its guidelines in mind as your marketing teams develop new content…and take other steps before that.
For example, your written supervisory manual should clearly outline your firm’s marketing procedures and the way you compensate promoters and solicitors. Ensure you’re communicating with the marketing team and comprehending their strategy in advance, so you don’t have to make manual changes on the fly (or worry that they’ll get skipped over).
Prohibited Transaction Exemption 2020-02, Improving Investment Advice for Workers & Retirees
The DOL will begin enforcing the new Prohibited Transaction Exemption 2020-02, Improving Investment Advice for Workers & Retirees Rule this year. To prepare for this enforcement:
- Make sure your written supervisory procedures are properly updated (see FINRA’s checklist here)
- Develop processes to ensure the disclosure forms are being provided to clients and completed correctly
- Ensure clients are made aware of the cost of moving their retirement assets
Annual Written Supervisory Assessment
Along with some states, the SEC requires an annual review and risk assessment of the written supervisory procedures. With all the tasks above, you’ll likely be making some updates to the manual. Once they’re complete, it’ll be a perfect time to complete the review and submit your risk assessment report.
As the world becomes more complex, our responsibility remains the same, to keep our organizations as compliant as possible and ensure we’re properly managing our responsibilities to our clients. It’s critical to ensure compliance programs are in good order, up to date, and being enforced, as the regulators may be more active during a COVID slowdown and more prone to show up on our doorsteps.
