Compliance 101 – Building Your Compliance Program from the Ground Up

Compliance 101 – Building Your Compliance Program from the Ground Up

July 1, 2020

To date, we have covered a myriad of topics designed to help you get your firm off the ground, focusing primarily on issues like registration, licensing, advertising, disclosure, and communicating and contracting with clients. These critical issues have one thing in common – they all involve working with folks outside your firm. Today, we kick off a new chapter of our blog, inviting you to turn your gaze inward and examine the key pieces of…

No Time Like the Present to Review Your Business Continuity Plan

June 3, 2020

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 to analyze your compliance program with specific attention on policies that may have been trigged as a result of the…

SEC Announces Exams Will Focus on Compliance with Form CRS

April 15, 2020

Business audit. Magnifying glass on financial documents.

If you can believe it, May 1, 2020 is almost upon us. And if you don’t remember from our February post, that is the day when advisory firms serving retail investors may start filing client relationship summaries on Form CRS. As a reminder, Form CRS gives clients a quick summary of the key things they need to know about working with your firm, as it discusses types of services offered, fees charged, conflicts of…

SEC Extends Form ADV Filing and Delivery Deadlines due to Coronavirus

March 18, 2020

As Josh discussed earlier this week, the annual update to Form ADV is generally due at the end of March for most robo-advisers. However, we are interrupting our current discussion thread to make sure you were aware that on March 13, 2020, the SEC extended Form ADV filing and delivery deadlines for investment advisers whose operations may be affected by the coronavirus. The agency acknowledged that the impacts of the pandemic may delay or prevent…

The Secret Ingredient – Disclosure of Your Algorithm

March 16, 2020

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 of investment products. Typically, this is done after a client has provided certain personal information (e.g., personal income, risk tolerance)…

New Form CRS – What You Need to Know Now

February 26, 2020

OK, so remember last June when we discussed registering your firm? If you do, you may recall that the principal adviser registration document, Form ADV, is divided into two parts: Part 1 (a check-the-box form that is mostly for use by the regulator) and Part 2 (a narrative brochure that is the principal client disclosure document). Well, for advisers registered with the SEC, as many robo-advisers are, there will soon be a new disclosure…

Hypothetically Speaking – Advertising your Back-Tested Performance

February 13, 2020

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, you can’t build a performance track record, and without a performance track record, it’s difficult to build a client base.…

Bringing Up the Past – Advertising Your Track Record

January 29, 2020

Let’s say that five years ago, you developed an investment strategy and built an algorithm to execute it. Since then, your robo-adviser has managed several client accounts using that algorithm. Much to your delight, the strategy weathered the ups and downs of the market and to date, has produced very favorable returns. Now, you want to share that track record with the world, or at least post it on your website, in order to attract…

Don’t Oversell It – False or Misleading Advertising

January 13, 2020

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 still contend with the “catch all” restriction, which prohibits any false or misleading disclosure in a robo-adviser’s advertising. As a…

Worrying About What Others Think – Using Testimonials in Advertising