As registered investment advisers (“RIAs”) attempt to grow their businesses, they often consider whether to use third-party solicitors. RIAs must take care to understand the compliance obligations they will face when they choose to enter into a solicitation arrangement.
On May 22, 2017, the Department of Labor (DOL) announced that the DOL’s new fiduciary investment advice rule would go into effect on June 9, 2017 (as opposed to April 10, the originally scheduled implementation date). This paper focuses on what the new applicability date means for our clients—separate account managers and private fund managers. Specifically, it addresses what they should start doing now and what they must do before the end of the transition period on December 31, 2017.
Investment advisers are subject to audit and examinations by the SEC and/or state regulatory authorities in somewhat unpredictable intervals. This paper focuses on the four topics most frequently identified in deficiency letters.
Investment advisers making public appearances, whether on television, radio shows, at conferences or conducting interviews with the press, need to be aware of the following regulatory considerations.
There is some question as to whether the Trump administration will repeal the fiduciary duty rule. For the reasons set forth herein, however, given the political, procedural and business dynamics at play, we believe it would be unwise for advisers to cease or even slow down compliance efforts.
It is important for hedge fund managers to fully understand the breadth of Regulation D’s
prohibition on general solicitation or general advertising. In plain English, a fund
manager may as well give investors the right to “put” his or her investment back to the fund (at
cost) if the manager does not scrupulously follow these Do’s and Don’ts.
Under the new Fiduciary Rule, when relying on the Best Interest Contract Exemption (“BIC Exemption” or “BICE”), a written contract is required. The contract may be a separate agreement or its required terms may be incorporated into the adviser’s standard investment management agreement. Either way, the contract must meet various explicit requirements contained in the new Rule.
PART 2: COMPLIANCE WITH THE “BEST INTEREST CONTRACT EXEMPTION” UNDER THE NEW FIDUCIARY DUTY RULE — “TO DO” LIST
This “TO DO” list is for investment advisers that intend to start or continue providing fiduciary investment advice to retirement plan investors in reliance on the new Best Interest Contract Exemption (“BIC Exemption” or just “BICE”). It is the second of a 3-part series on this topic.
The voluminous new Fiduciary Rule will fundamentally change the way advisers deliver investment recommendations to retirement plan participants and IRA holders. To be certain, it presents fundamental challenges for advisers, brokers and insurance agents alike—although far more so in the case of brokers and agents. This presents significant opportunities for those advisers who are smart enough to spot them.
In the current environment, advisers with prior performance and a solid book of business are in high demand. If such advisers (or team of advisers) were solely responsible for achieving prior performance at a predecessor firm, the fact that the performance track record was established at a predecessor firm would not, in and of itself, bar the portability of the prior performance record.