The Challenges of Compliance for State-Registered Advisers

Are you the designated chief compliance officer of a state-registered investment advisory firm? If so, you must be clocking many extra hours these days! It seems the state regulators are just as busy as the Securities and Exchange Commission. New Jersey, Massachusetts and Nevada have all introduced their own Fiduciary duty standard rules. The North American Securities Administrators Association (NASAA) introduced a model act to protect vulnerable adults. In addition, NASAA members voted to adopt an information security model rule package. All this and we haven’t even mentioned the potential implications of the SEC’s new Form CRS on your workload.

Add to that state regulators’ increased frequency of regulatory examinations and you have yourself a nearly unmanageable situation! State CCOs have to work harder on the limited budget that compliance is allotted. And while keeping ahead of the regulations, many investment advisers’ CCOs are also the primary adviser meeting clients and trying to grow their business. But growing your business may be hindered if your compliance program is not up to state standards.

Here are a few topics state CCOs should be focusing on, along with some helpful hints to further guide you in strengthening your compliance program:

  • Be aware of the Senior Safe Act and provide your entire staff with training.
  • Working with Senior Clients and Vulnerable Adults is a hot topic! Have policies and procedures in place covering this topic: trusted contact forms, SARs reports, etc. Familiarize yourself with the Serve Our Seniors website!
  • Cybersecurity is everyone’s concern, but mostly the CCOs these days. Get to know the model NASAA information security and privacy rule and implement protocols to protect your firm. The model rule requires investment advisers to adopt policies and procedures regarding information security.
  • Regulatory examinations are challenging, so prepare in advance for when the big day comes.
  • Find a resource to keep on top of new regulations.
  • Monitor for more than five clients in a new state (or other exceptions) – you may have triggered a new state registration and may be acting as an unregistered adviser in that state. Yikes!
  • Figure out if you are keeping all the required books and records. Are you aware that NASAA amended the recordkeeping requirements for investment advisers mode rule? If not, it’s a great exercise to go through the list and ensure you know where the records are located for ease of reference.

So how does one stay ahead of all these moving parts? The reality is that a single blog post can’t address all of the many things that you need to stay ahead of as a chief compliance officer! Participation in our complimentary monthly ComplianceCasts is a great first step toward laying the building blocks of a successful compliance program. You can check out our archive here. Additionally, Ascendant, the compliance services arm of CSS, provides step-by-step compliance with the many obligations of a state-registered investment adviser. If you do not have that great partner, have a look at our service offerings and give us a call!


Subscribe to CSS Blog

CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

Loading form...

Latest Content

Countdown to CCPA: Are You Ready to Comply with New Data Privacy Requirements?

With less than one month before the California Consumer Privacy Act (CCPA) is effective, companies are preparing to update their cybersecurity programs. Many must address the regulation’s new data privacy requirements, which have caught some financial institutions off guard. Modeled to some extent after the European Union’s General Data Protection Regulation (GDPR), the CCPA provides … Continued

ESMA Updates AIFMD Q&A on Reporting to National Competent Authorities

The European Securities and Markets Authority (ESMA) has updated its Questions and Answers on the Alternative Investment Fund Managers Directive (AIFMD). One new Q&A has been added with regard to reporting to National Competent Authorities. ESMA has provided clarification on reporting on liquidity stress tests for closed-ended unleveraged Alternative Investment Funds (AIFs). These AIFs are exempt from the … Continued

CSS Named to RegTech 100 List of World’s Most Innovative RegTech Companies

NEW YORK – Compliance Solutions Strategies (CSS) is proud to announce its inclusion in the RegTech 100 for 2020, a list recognizing the world’s most innovative RegTech companies compiled by RegTech Analyst, a specialist research firm. “We are honored to be selected as one of the most innovative companies within such a competitive and evolving … Continued