Thus far, our review of the necessary components of your compliance program has focused on discrete areas. This post focuses on another equally important aspect of your compliance program that touches all of those other areas; ensuring the accuracy of your disclosures. After all, what’s the point of putting in all of the hours to
Soft Dollar Arrangements – What to Know
In our last post, Craig began our discussion of trading practices by examining an adviser’s duty to obtain best execution. This post continues our trading practice discussion with a focus on soft dollar arrangements.
Soft dollar arrangements generally arise when an adviser receives research or brokerage products or services from a broker-dealer in exchange
Maintaining Compliance with Your Portfolio Management Process
In a previous blog post, we discussed an adviser’s fiduciary duty to provide advice based on the client’s financial situation and investment objectives. In today’s post, we’ll examine the practical implications of this requirement from a compliance prospective.
Craig noted in our last entry that Advisers Act Rule 206(4)-7 (the “Compliance Rule”) requires that
No Time Like the Present to Review Your Business Continuity Plan
To our readers, we hope this entry to our blog finds you and your family safe and healthy. As we all begin to envision a path forward following the unprecedented events caused by the COVID-19 pandemic, a focus on compliance for your firm should not be an overlooked task.
For robo-advisers, this is an opportunity
The Secret Ingredient – Disclosure of Your Algorithm
With the deadline for the annual update to Form ADV closing in at the end of March, let’s examine one aspect of Form ADV disclosure which impacts a majority, if not all, robo-advisory firms – algorithm related disclosure.
Your firm likely utilizes a proprietary algorithm to automatically determine client asset allocation among a limited set
Hypothetically Speaking – Advertising your Back-Tested Performance
In our last post, Craig laid out the process of advertising a performance track record. That’s great, if you have a track record. What about a newly operational robo-adviser with no performance history? Your firm likely has spent considerable resources building and developing an investment strategy and corresponding algorithm. But without a client base,
Don’t Oversell It – False or Misleading Advertising
You’re ready to advertise. You know the basics, you can handle the complexities of including past specific recommendations, and even understand how to appropriately include client testimonials. Let the advertising campaign commence! Well, not so fast. Even if you’ve successfully managed all of the potential pitfalls we’ve discussed so far, you must
Bringing Up the Past – How to Navigate Past Specific Recommendations
You want to attract clients. You need to advertise to attract clients. You might think that a great way to attract new clients is to advertise how past recommendations or security selections have worked for current clients. You may want to explain on your website or app how your model works by giving examples of
Compliance with Solicitation: How to Build a Strong Referral Base
The saying goes, referrals are the lifeblood of any business. Indeed, all business owners, robo-advisory firms included, strive to provide a level of value and service to their customers such that those customers in turn become advocates and solicitors of the business. Unfortunately, word of mouth referrals alone are not usually enough. Your firm may
Can We Do That: A Case for Early Compliance Intervention
So, you’ve decided to launch a robo-advisory firm? Understandably, your first considerations are likely tied to the functionality of your product. Perhaps the final testing of your algorithm is complete, and your attention has turned to how clients will use your product. What will your client interface look like? How will client information be collected?