How to (Legally) Settle Disputes with Clients

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A little less than a year ago, I wrote an article about alternatives to mandatory arbitration for resolving disputes between advisors and their clients (see, Beyond Mandatory Arb: 4 Options for Advisor-Client Dispute Resolution). Consider this article the prequel. Indeed, there is an even more attractive means to resolve a dispute before suiting up for court or arbitration… Just settle the damn thing. Settlement between quarreling adversaries is statistically the most common resolution. According to FINRA’s 2016 Dispute Resolution Statistics, 50% of all FINRA arbitrations are settled independently between the parties; only 21% of arbitrations are actually decided by an […]

A Few Thoughts on the SEC’s Robare Decision

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There’s a State Farm commercial currently on TV that depicts Green Bay Packers quarterback Aaron Rodgers attempting to kill a fly in his house using a golf club. He swings wildly at the fly, loses his grip on the club, and sends it crashing through his bay window and into the side of a truck parked outside. With shattered glass everywhere and the truck’s alarm blaring, teammate Clay Matthews asks Rodgers “Well, did you get it?” Rodgers shrugs unknowingly. The more I think about it, the more I see a parallel to the SEC Commissioners’ November 6th opinion, In the Matter of […]

Adviser Changes of Control: An Elusive Definition

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In some form or another, nearly every registered investment adviser will at some point be involved in a merger, acquisition, sale, or restructuring. Whether it’s a simple equity ownership stake by a new financier, the addition of a new partner, a union of two practices, the death of a major shareholder or the full-blown execution of a succession plan, RIAs will inevitably need to navigate SEC “change of control” rules and guidance. Such rules and guidance are rooted in the requirement that investment advisory contracts may not be assigned without client consent. I discussed the interplay of positive and negative […]

State De Minimis Registration Considerations for Advisors

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Federalism can be a real pain in the neck sometimes. While the duality of both state and federal government has endured and served our country well, it has made investment advisor registration at the state level a mix of hard-to-find statutes, non-intuitive exceptions and revenue grabs. The most notable of these state-by-state registration quirks is the infamous “de minimis” exemption from registering as an investment advisor in a particular state. The National De Minimis Standard, as it is officially referred to, is contained in Section 222(d) of the Investment Advisers Act of 1940. It traces its roots back to 1997, […]

The Implications of Investment Discretion

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Last month I penned an article that described how the SEC expects advisors to calculate their Regulatory Assets Under Management (“RAUM”) with respect to investment management and financial planning clients. Only securities portfolios for which the advisor provides “continuous and regular supervisory or management services” count toward RAUM, but advisors that do so on a discretionary basis have a lower burden to overcome than non-discretionary advisors. This month’s article attempts to answer the next logical question: how do I know if my firm has investment discretion? The simplest definition can be found in the Form ADV Glossary, which states that […]

Financial Planning & Regulatory Assets Under Management

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As the financial services industry continues to evolve, so, too, does the distinction between “investment management” and “financial planning” as discreet but complementary services that a registered investment adviser can provide to clients. I’d read two of Michael Kitces’ recent posts for a more fulsome discussion of an “investment-centric” versus a “financial-planning-centric” firm culture (here and here), but suffice to say it is not a distinction without a difference. The former focuses on managing or recommending a portfolio of securities on behalf of a client, and the latter focuses on life decisions that have some sort of financial impact (managing […]

Four Useful Hacks for the SEC’s IAPD Disclosure Site

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It’s been said that the eyes are the window to a person’s soul, but I’d argue that a person’s internet browsing history is also pretty telling. It can reveal a lot, and in my case it revealed that I am a complete and incorrigible fanboy of the laws, rules and regulations that smother surround the financial services industry – particularly the Securities and Exchange Commission’s disclosure regime. More specifically, my history reveals repeated visits to the SEC’s Investment Adviser Public Disclosure website, or IAPD, at Congress required that the SEC establish “a readily accessible electronic process to respond to […]