More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Securities attorneys and compliance officers often recommend advisors use a formal investment policy statement with clients to help define what an advisor will provide to an individual client in terms of an investing plan, with benefits to both the advisor’s firm in terms of liability and the clients themselves. On Monday, Commonwealth Financial Network announced it would offer to its affiliated representatives IPS AdvisorPro’s investment policy statement (IPS) software, which allows for the creation of compliant IPS statements that integrate with MoneyGuidePro financial planning and Redtail CRM software.
In a statement, Commonwealth Financial’s VP of wealth management, Gavin Morrissey (left), said that IPS AdvisorPro, founded by noted advisors Norm Boone and Linda Lubitz Boone, provides “sufficient flexibility in the investment process to capture opportunities, while helping to ensure that prudence and care are maintained in the execution of the statements.” (Morrissey is a regular blogger for AdvisorOne; see his most recent posting.)
"Investment policy statements are not only a prudent best practice in private wealth management, but they are critical to relationship management, as well as an effective marketing tool," continued Morrissey.
A Commonwealth spokesperson said Commonwealth advisors will receive preferred pricing on their subscriptions to IPS AdvisorPro, and that integration with MoneyGuidePro and Redtail came in response to requests by Commonwealth advisors.
In addition to that integration, Commonwealth said IPS AdvisorPro subscriptions provide:
- Eight client-type IPS templates, with corresponding questionnaires to gather data for inclusion in the statement
- The ability to create an unlimited number of additional templates
- Thirty-three asset classes with which to create unlimited asset allocation models, each with historical return and standard deviation data
- A risk tolerance questionnaire that scores responses using an algorithm
(Read an archived feature story on Norm Boone and Linda Lubitz Boone's personal and professional lives from the archives of Investment Advisor.)