lawyer for financial advisors

Compliance Insight From a Lawyer for Financial Advisors

Compliance today, gone tomorrow. Today’s financial advisors face complex and ever-changing compliance issues. With the help of a lawyer for financial advisors, many compliance pitfalls are avoidable. Certainly change is inevitable, and in today’s world it can happen quickly. There are two main types of change that ultimately affect compliance within the financial industry. Firstly, external changes occur as societal expectations, norms, and technology evolve. Lastly, internal changes come from legislation and/or regulation frequently aimed at addressing an emerging external issue. 

External Change in the Financial Marketplace

One recent example of an external change is the digitalization of the financial marketplace. It introduced an entirely new component of compliance issues related to online activities like client communications, advertising, and social media.  For instance, anything a financial advisor does online that advertises or solicits prospective clients, whether in a blog, tweet, or Instagram post, is considered “advertising,” and may be subject to compliance review under FINRA.  This area, just like technology itself, is constantly evolving. As a result, it raises new compliance questions for financial advisors that may not always have a clear answer.

Internal Change in the Financial Marketplace

One new internal change is Regulation Best Interest (“Reg BI”), passed by the SEC in September 2019. Reg BI was designed to raise the broker-investment standard from suitability to best-interest. However, critics and even supporters of Reg BI acknowledge that the principles-based rule does not define “best-interest,” and leaves ambiguity in its enforcement.  Seven states and the District of Columbia have filed suit against the SEC in an effort to overturn Reg BI. These states argue that the SEC violated the Administrative Procedure Act. To sum up, while the general consensus is that the lawsuits will ultimately prove unsuccessful in overturning Reg BI, the short-term take away for a financial advisor (who operates as a broker) is that regardless of the lawsuits, FINRA expects enforcement of Reg BI to happen in July 2020.   

The Role of a Lawyer for Financial Advisors

Indeed, change is inevitable, but an experienced lawyer for financial advisors can help navigate compliance issues in fast-developing areas like technology and ambiguous areas of regulatory enforcement.

The Rogge Dunn Group has extensive experience helping financial advisors across the U.S. with a variety of matters, including compliance and regulatory issues. To contact us about legal issues surrounding the financial industry, click here.

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