Key Compliance Strategies For RIAs Post-Acquisition

When a registered investment adviser (RIA) goes through an acquisition, the transition period is critical for maintaining seamless operations and ensuring adherence to regulatory requirements. Understanding compliance obligations is essential to integrating successfully and continuing to provide excellent service to clients. Here are the crucial compliance areas that RIAs should focus on post-acquisition, along with how AdvisorLaw can be a valuable partner.

1. Registration Adjustments: Acquisitions may necessitate changes in registrations. This could mean registering in additional states, if the client base expands, or transitioning from state to SEC registration, if the regulatory assets under management (AUM) surpass specific thresholds.
2. Client Consent & Notifications: It is imperative to secure explicit client consent when transferring accounts to a new entity. Clients should be fully informed about any changes regarding advisory personnel, fee structures, and investment strategies.
3. Privacy & Data Security: Adherence to privacy laws, such as Regulation S-P is non-negotiable. The acquiring firm must ensure that robust data security measures are in place to protect client information, both during and after the transition.
4. Updating Form ADV & Other Filings: Post-acquisition, it’s critical to update the Form ADV to reflect any changes in business practices, including changes in AUM, client demographics, and operational addresses. Other regulatory filings must also be adjusted to accurately represent the firm’s new structure.
5. Client Agreements & Disclosures: Review and, if necessary, revise client agreements to align with the new management and operational structure. Transparency in disclosures maintains client trust and ensures regulatory compliance.
6. Recordkeeping: Integrating all necessary records from the acquired firm, including trade records, client files, and historical documentation, is essential for compliance. These records must be managed according to regulatory standards.
7. Internal Policies & Procedures: Updating internal compliance manuals, codes of ethics, and risk assessment protocols is crucial. A unified approach to compliance and operations across the merged entity helps mitigate risks and streamline processes.
8. Staff Training & Dual Registration: Training retained staff on the acquiring firm’s policies and procedures is vital. Additionally, dual registration of advisors might be necessary during the transition to ensure compliance and operational coherence.

Smoother RIA Acquisitions With AdvisorLaw

Navigating an RIA acquisition can be a complex maze. Partnering with AdvisorLaw can help RIAs achieve a smoother post-acquisition transition. Although AdvisorLaw is not a law firm and does not provide legal advice, our team of experienced attorneys brings a wealth of knowledge to the table, addressing each key compliance area you’ll encounter.

We tackle everything, from navigating complex registration requirements across different jurisdictions to providing clear communication with clients and securing their informed consent. 

Data security is a top priority, and AdvisorLaw guides best practices to safeguard sensitive client information throughout the transition. We don’t stop there. Our expertise helps with efficient regulatory filings that meet SEC requirements and the drafting of compliant client agreements that protect both the RIA and its clients. 

Merging records from the acquired firm? AdvisorLaw can advise on the proper methods for seamless integration so that all documentation is retained and accessible according to regulations. 

Finally, we help minimize confusion among staff with clear and up-to-date internal policies and provide comprehensive training programs for a smooth onboarding process — navigating any complexities of dual registration during the transition period, when necessary. 

By partnering with AdvisorLaw, RIAs gain a knowledgeable and experienced partner to accompany you throughout this intricate process. Our extensive services help you meet all regulatory requirements, protect client information, and maintain trust.

Contact our team today for a complimentary consultation.