The Practice

  • Anti-Fraud Provisions of the Investment Advisers Act

    By Les Abromovitz  |  January 1, 2012

    RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not.  Deviating from the fiduciary standard of full disclosure while courting clients may cause the advisor significant problems.

  • Books and Records Rule

    By Les Abromovitz  |  January 1, 2012

    Thorough and complete books and records enable RIAs to demonstrate that they have fulfilled their fiduciary obligations to clients and complied with applicable rules and regulations.

  • Conducting Due Diligence of Sub-Advisors and Third-Party Advisors

    By Les Abromovitz  |  January 1, 2012

    Engaging in due-diligence of sub-advisors isn’t just a recommended best practice— it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firm’s strategy is proprietary.

  • Disaster Recovery Plans and Succession Planning

    By Les Abromovitz  |  January 1, 2012

    RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients’ financial well-being may be jeopardized.  RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.   

  • Meeting and Exceeding Clients and Regulators’ Expectations

    By Les Abromovitz  |  January 1, 2012

    Although it can be difficult, there are ways for RIAs to meet or exceed client expectations, increase customer satisfaction, and help firms retain current clients and attract new ones.

  • Preventing and Dealing with Client Complaints

    By Les Abromovitz  |  January 1, 2012

    Although the SEC has not provided specific guidance on how client complaints should be handled, a firm’s policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.

  • RIAs and Customer Identification

    By Les Abromovitz  |  January 1, 2012

    Just as RIAs owe a duty to diligently protect their clients’ privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.

  • Registration Requirements for Investment Advisor Representatives (IARs)

    By Les Abromovitz  |  January 1, 2012

    When individuals launch an advisory firm, they must avoid marketing themselves or the firm as investment advisors before they are properly approved and registered.  Otherwise, they are subject to severe penalties.  

  • Risk-Based Oversight of Investment Advisors

    By Les Abromovitz  |  January 1, 2012

    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.

  • The Custody Rule and its Ramifications

    By Les Abromovitz  |  January 1, 2012

    When an RIA takes custody of a client’s funds or securities, risk to that individual increases dramatically. Rule 206(4)-2 under the Investment Advisers Act (better known as the Custody Rule), was passed to protect clients from unscrupulous investors.

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