Regulatory Compliance E-newsletter – November 2016

Feature of the Month

31st NRS Fall Conference Highlights and the Changing Regulatory Landscape in 2017

The NRS 31st Annual Fall Compliance Conference, recently held in Scottsdale Arizona, delivered rich content, expertise and peer learning to compliance officers, executives and industry professionals in a striking setting.  At the conclusion of this noteworthy event, attendees returned to their firms better prepared to tackle the multitude of new regulatory initiatives on the horizon as well as evolving examiner expectations. With over 200 in attendance, the three-day conference focused on instruction and exploration, networking and dialogue regarding many of the most pressing compliance issues of the day.  Here are a few of the highlights:

  • A keynote address from Peter B. Driscoll, U.S. Securities and Exchange Commission chief of the newly formed Risk and Strategy Office about the office’s purposes and operations, how it will use technology and analytics to single out high risk practices and firms for Commission staff to examine, and the risk areas and practices it is currently concerned with.
  • A dialogue with regulators providing insight into current focus areas of the SEC, FINRA, NASAA and the DOL including new and emerging risks in financial technology, mergers and acquisition activity, and anti-money laundering and financial crimes
  • Identifying issues critical to firms right now and for the upcoming year including protecting senior investors, managing cybersecurity risks and supervisory systems and controls
  • Assessing the questions and concerns of various regulatory bodies pertaining to implementation of the new DOL Fiduciary Rule including how to manage the SEC’s questions during an examination regarding the implementation of the compliance requirements under the DOL’s new fiduciary rule
  • Risk management and preparation for upcoming changes in regulation involving: Business Continuity & Succession Planning, Anti-Money Laundering Requirements and Third-party Examinations of Investment Advisers.
  • A deep dive into many of the Commission’s perennial focus areas such as safeguarding client assets, portfolio compliance and trading practices.
  • Scenario-based learning workshops including hands-on exercises for effective evaluation and supervision of advertisements.
  • An extended session on Cybersecurity and interactive workshops dedicated to industry best practices
  • An NRS Innovation Lab that highlighted NRS technology solutions and solicited user feedback on new product development for the compliance industry
  • Watching the seventh game of the World Series outdoors at Mummy Mountain under the moon and star-lit Arizona sky

As we review the lessons learned from the 31st Annual Fall Compliance Conference and the upcoming regulatory changes on the horizon, NRS provides these simple reminders to help manage the burden:

  • Stay current using SEC alerts and automated email notification services, and assess your firm’s risks and conflicts of interest in light of these releases;
  • Don’t neglect core compliance areas that are perennial focus areas of the SEC including advertising performance, best execution, disclosure and personal trading, among others.
  • As new regulations are proposed, review well in advance and determine scope and applicability; train staff regarding new requirements; and set expectations by notifying senior management early and often.

Don’t miss the NRS 32nd Annual Spring Compliance Conference in Nashville. NRS is planning yet another enlightening event to provide you with the critical knowledge and skills needed to maximize your resources in the development and maintenance of a compliance program that keeps pace with our dynamic and ever changing regulatory environment.

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NRS Technology Solutions Improvements

Our technology team has been hard at work improving our products. Almost every one of our solutions will be getting significant improvements in the next six months. If you use ComplianceGuardian IA Policies and Procedures, ComplianceMAX Ad Review, Audit Technology, Customer Complaints, Disclosures and Attestations, ADV, G&E, or Registration and Licensing, your user experience will get faster, friendlier, and be better looking.

If you use any of these solutions and/or are interested in seeing what we have planned, please contact our Product Team (the people who design your software) to schedule an exclusive preview of upcoming improvements. Contact us via email –

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Education and Continuing Education

Is there a difference between education and continuing education? Definitions, research and opinions vary. NRS Education supports the mainstream definitions that focus on education as foundational knowledge and continuing education as an expansion on foundational knowledge as well as a vehicle to keep current on new developments within the field of investment adviser and broker-dealer compliance.

NRS has been providing education for 30 years and has been provider of continuing education – as documented by NRS’s ability to maintain continual approval from several CE agencies for meeting continuing education criteria – since 1994. NRS Education events are designed to meet criteria for continuing education credits for attorneys, CPA/accountants, certified financial planners, compliance professionals, and other financial securities professionals.

Both NRS education and continuing education can be enriching experiences and offer compliance professionals the opportunity to maintain licenses, certifications and designations, expand skill sets and remediate learning gaps, and could even be a path to a higher-level position. Earn CLE, CPE, CFP® and IACCP® credits while developing and updating your firm’s compliance program.

View the updated NRS Education Calendar, which lists many opportunities to gain foundational knowledge and keep you ahead of the curve on regulatory examinations, cybersecurity, ethics, the DOL’s new fiduciary rule, advertising, AML and more. Explore these opportunities including:

Directed Compliance Education Programs:

Unlimited Flexibility for Learning Your Way:

  • Convenient compliance education options provide up-to-date intelligence where and when you need it

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How are you preparing for the new DOL rules?

The Department of Labor’s new fiduciary rule was a hefty 1000 page thriller that left IAs and BDs with not only a daunting task ahead of them but a lot of unanswered questions. Not surprisingly, there is a good deal of confusion and uncertainty among firms trying to comply with the new rules.  The new fiduciary rules have the potential to disrupt your firm’s compliance, operations, sales processes, rep compensation, and the products and services your firm offers. 

Many firms mistakenly conclude that, if they are fiduciaries under the Advisers Act, nothing more needs to be done.   However, the definition of “fiduciary,” and the requirements of fiduciaries, differ dramatically under the Advisers Act versus ERISA. Under the Advisers Act, an adviser meets its fiduciary duty through full and fair disclosure.  By and large, disclosure is necessary and sufficient to meet this duty. However, under ERISA, a fiduciary meets its duties by working within available prohibited transaction exemptions (“PTEs”).  Under the Department of Labor’s new rules, while disclosure is required by the Best Interest Contract Exemption, it is only one part of the exemption.  Disclosure is necessary but not sufficient to meet the fiduciary requirements of an adviser using the Best Interest Contract Exemption.

While there are many unanswered questions surrounding the implementation of this rule, you cannot wait for all of the answers before you come up with a plan. You must start acting like an ERISA fiduciary by April 10, 2017. If you are a firm working with retirement accounts, it’s important that you take a good look at your business and consider how your firm will best deal with meeting all the requirements. Consider the issues at your firm that currently conflict with the new rules, create a plan for how your firm will meet these rules, and implement the initial stages of the plan by April 10, 2017.

NRS can assist in any or all of the following ways:

  • NRS can provide consultative guidance for your firm – a review of your business model, what circumstances will require the Best Interest Contract (BIC) or the “BIC Lite,” and provide a timeline of your obligations. Our 30+ years of compliance experience have shown us that the first step in addressing a complex issue is to break it down into its fundamental components as they apply to your firm
  • Subscribe to NRS’ ComplianceGuardian DOL module which will include model documents and contracts, a profile driven policies and procedures tool specific to this new regulation, and training modules so that your firm has the tools it needs to implement this new rule. Coupled with this service, NRS Consultants will help you tailor the model procedures and website disclosure for your specific business practices. In addition, NRS Consultants will assist your firm with any necessary Form ADV updates as a result of any business changes made as a result of compliance with this rule.
  • Educational programs with expert speakers who can review the rule, the requirements, and the timelines as well as answer any questions you may have.

Our approach is not to provide documents and contracts – which may or may not be what you need – for you to implement blindly or unnecessarily, but to provide a complete solution that allows you to have a consultative relationship based on your firm’s specific practices throughout the entire planning process and to have the tools and education you need to implement the plan.

If you would like to make sure your firm’s compliance program is sufficient for any potential regulatory scrutiny, please contact us today.


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