On April 16, the SEC issued a risk alert pertaining to Regulation S-P Privacy Notices. According to the SEC Office of Compliance Inspections and Examinations (OCIE), the risk alert “is intended to assist advisers and broker-dealers in providing compliant privacy and opt-out notices, and in adopting and implementing effective policies and procedures for safeguarding customer records and information, under Regulation S-P.”
The SEC describes Regulation S-P as “the primary SEC rule regarding privacy notices and safeguard policies of investment advisors and broker-dealers.”
Regulation S-P Requirements
As part of its governance, Regulation S-P includes three key requirements:
- Provide a clear and conspicuous notice to its customers that accurately reflects its privacy policies generally no later than when it establishes a customer relationship.
- Provide a clear and conspicuous notice to its customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship.
- Deliver a clear and conspicuous notice to its customers that accurately explains the right to opt out of some disclosures of non-public personal information.
At Beacon, we believe merely having policies and procedures in place isn’t enough with Regulation S-P to be effective, advisors must also consistently review their written policies and procedures to ensure compliance.
Other Regulatory Updates and Reminders
Although the 35-day government shutdown slowed the SEC’s directives at the beginning of the year, things are beginning to heat up at the government agency. The following are a couple of regulatory updates and one reminder for advisors to keep in mind in 2019:
The Best Interest Rule. Recent reports point to the SEC finally releasing its final advice-standards package in the third quarter. Included in that package will be Regulation Best Interest. While we don’t have the full rule in hand yet, based upon the information we’ve been hearing, we expect this to be a very tame version of the Fiduciary Rule. And, because Beacon and its advisors have always held that fiduciary responsibility with clients, this ruling should not cause changes in how we do business.
Advertising and Performance Guidelines. In an interesting bit of news, the SEC plans to come out with updated advertising and performance guidelines later this year. Why is this interesting? Because these guidelines have not been rewritten since the 1960s, and it’s long overdue for an overhaul due to the technological and communication advancements that have taken place in the past 50 years.
ADV Compliance Checklist. Finally, a reminder. If your fiscal year ended December 31, make sure that you’ve provided your annual delivery documents to your clients. It’s easy to make mistakes or miss a detail when filing Form ADV because it has very specific disclosure requirements so you can reach out to your contact at Beacon if you have any questions.
A Strong Fiduciary Role
At Beacon, we take our fiduciary responsibilities and the fiduciary responsibilities of our advisors very seriously. So that those duties are met, we’ve developed checklists, policies and procedures to work with our advisors to ensure that their clients have protections in place. If you would like to learn more about the tools and strategies we’ve designed, contact your wholesaler today!