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As March quickly approaches, RIAs are reminded that it’s time to review their annual compliance. Every year, it’s vital for firms to hold an annual meeting with employees to thoroughly review and document their compliance requirements. It’s essential for firms to assign individual responsibilities so that each employee is aware of their role in making sure that all due diligence is practiced. RIAs should take extra caution when it comes time for annual reviews. As simply completing a carbon copy will raise alarm bells among regulators, whatever your firm does must be accurate and detailed.
If your RIA’s fiscal year ended on Dec 31st, 2022, your Form ADV and annual filings are due March 31st, 2023. To help you have a successful 2023 annual compliance review, here are some dos and don’ts to keep in mind.
Do understand the requirements of your state regulator.
For starters, be sure you understand the specific requirements of your regulator — whether your firm is state or SEC registered. Each RIA must adhere to its own set of regulations, so it’s important to have a thorough understanding of what is expected from you. This includes understanding which laws are applicable in your jurisdiction, which forms must be filled out, and what process needs to take place during the review itself.
Do leverage technology solutions.
Technology solutions can help streamline processes, such as policy reviews, document management, data collection, customer reporting, and more. Leveraging technology solutions can help make the entire process easier for everyone involved while ensuring that all requirements are met. Additionally, many software solutions now offer automated alerts for upcoming due dates or notifications when certain tasks have been completed. Automation can help save time, while still providing accuracy with regard to regulatory requirements.
Don’t forget about client reporting.
It’s important that you understand each client’s needs in order to meet your fiduciary obligations to them. Among other things, this means having up-to-date reports detailing performance metrics, such as return on investment (ROI), risk analysis, portfolio diversification levels, and tax implications associated with various transactions. All of these need to be reviewed at least annually or as needed, based on changes in the market or other factors affecting clients’ portfolios or investments.
Most importantly — don’t wait until March!
Making sure your RIA conducts its annual compliance review successfully requires careful consideration of numerous factors — some of which may require the expertise of an attorney or legal team. Waiting until the last minute can put your RIA at risk of simple regulatory and rule violations that you may not be able to correct before your next exam.
Do hire a compliance team.
The good news is that there is an easy way for RIAs to be successful during their reviews — by hiring a team of compliance specialists and attorneys to guide them through the process. AdvisorLaw can get you on top of annual reviews and Form ADV with an experienced team that can provide guidance regarding the most common compliance issues experienced by RIA firms.
Don’t take it all onto your shoulders and try to do everything yourself. AdvisorLaw has the expertise needed to help you move forward confidently when exam time arrives. To adequately provide our compliance services, RIAs must engage with AdvisorLaw prior to Wednesday, February 15th.
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