I have served hundreds of RIAs. I’ve consulted with start-ups. I have served as Chief Compliance Officer for a $2 billion AUM firm, General Counsel and CCO for a $600 million AUM firm, compliance and legal partner for a $1 billion TAMP. I can tell you the challenges don’t go away, they grow and change and become more expensive.
When you are first starting out, you are focusing on generating business. You get out there and hustle to make it rain. When it rains, it pours and now you are focused on getting an assistant to help with the paperwork and perhaps another adviser to help service your clients. As your book of business grows, you turn to technology to streamline your processes and deliver a higher quality product that can be completed in half the time. You start to look to outsource some of your responsibilities and turn over some of your “hats” to others.
You think you are doing all the rights things, then boom! a regulatory examination request arrives asking for client files, financials, trade error blotters, a copy of your compliance manual and more. You haven’t looked at your compliance manual in a few years now and it is still in template format because you never went back and updated it or reviewed it to make sure it was accurate. Not all of your clients have client agreements, and you haven’t really been documenting your reviews of their accounts. You didn’t know that you were supposed to have disclosures in the performance information you were providing prospective clients. And what is this about reviewing emails? Best execution review? Business risk inventory?
You are feeling overwhelmed. You reach out to the company that drafted your compliance manual and they tell you, “Sorry, we aren’t lawyers. We can’t provide you legal advice and we won’t defend you if the examiner takes issue with the documents we provided. As Chief Compliance Officer you are responsible for maintaining your compliance documents. Sorry.”
Inevitably, I get a call from an adviser in full panic mode. I’m used to these calls and each one still gets me frustrated. Why? Because you paid for a work product that is now not serving you or your firm. Now you have a deficiency letter and need to do some remediation to avoid a fine.
This situation has happened to my clients that have just launched their business and this has happened to my clients who have a multi-billion dollar book of business. But this doesn’t have to happen to you.
I created My RIA Lawyer to help financial advisers and firms navigate the legal complexities of the RIA world. We are the ONLY law firm SOLEY focused on the RIA space- so naturally we are a bunch of RIA compliance and legal nerds! And we are ready to serve you.
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