Developing Your Investment Advisor’s Compliance Calendar for 2013

November 27, 2012

Determining ongoing compliance requirements may seem overwhelming to many registered investment advisors.  Complying with the rules and regulations under the Investment Advisers Act of 1940 (“Investment Advisers Act”) and similar state investment advisor regulations must be a central part of an investment advisor’s fiduciary duties.  Investment advisors have a variety of duties to perform throughout the year in order to comply with the requirements of the Investment Advisers Act and similar rules of state securities regulators.  Having a well-organized process can help streamline an investment advisor’s ongoing compliance requirements.  To help manage the ongoing compliance process, registered investment advisors should consider developing a compliance calendar that can serve as an effective and proactive tool to assist the investment advisor with meeting its ongoing compliance requirements. Developing a compliance calendar can help strengthen an investment advisor’s written compliance policies and procedures that must be developed pursuant to Rule 206(4)-7 of the Investment Advisers Act and similar state rules to detect, prevent, and correct possible regulatory violations that can occur throughout the year.

Investment advisors that do not have a compliance calendar in place should consider preparing one now for 2013. In order to develop a customized investment advisory compliance calendar, an investment advisor should review its written compliance policies and procedures. A well written, customized compliance program should lay out the investment advisor’s ongoing compliance requirements and the systems and controls the investment advisor has in place to prevent, detect, and correct compliance violations. If the investment advisor’s written compliance policies and procedures indicate that a specific task will be performed, it should be included on the investment advisor’s compliance calendar. When developing the compliance calendar, the investment advisor should indicate when the specific task will be performed as well as who will be responsible for performing the task.  Not performing a task that is specifically included in the investment advisor’s written compliance policies and procedures is an easy red flag to a securities regulator that the investment advisor has not customized or fully implemented its written compliance policies and procedures.  Compliance calendars can help to eliminate uncertainties about an investment advisor’s ongoing compliance requirements and can be used as a tool when an investment advisor conducts an annual compliance review. Compliance calendars should include ongoing investment advisor regulatory requirements such as the annual compliance review, annual renewals, or the annual Form ADV update filing as well as the internal control and ongoing monitoring tasks that the investment advisor performs to prevent and detect violations.

The following are a few examples of tasks investment advisors should consider including on their compliance calendars:

  • Ongoing reviews and monitoring for proper firm registration and investment advisor representative licensing;
  • Quarterly fee audits to check that client fees are being billed correctly;
  • Advertising review and monitoring;
  • Email surveillance;
  • Ongoing compliance training;
  • Outside business activities reporting and monitoring; and
  • Due diligence reviews (e.g., solicitors, third party money managers, service providers)

Even if an investment advisor is already using a compliance calendar, as this year comes to an end the investment advisor should review and update its annual compliance calendar to make sure that it addresses all required tasks, reflects any necessary changes due to internal or regulatory developments, and verifies that someone is properly assigned to perform the tasks.

For more information and tips to assist your investment advisor in preparing its compliance calendar, RIA Compliance Consultants is hosting a webinar “Getting Your Compliance Calendar Ready for 2013,” on December 6, 2012 from 12:00 to 1:00 pm CST.  The fee for this webinar is $69.95. To register, simply click here.

For more information about our investment advisor registration and compliance services, click here to schedule a time to speak with one of our Senior Compliance Consultants.

Posted by Bryan Hill
Labels: Compliance Calendar, Compliance Program, Compliance Training