Page 10 - Investment Advisor June 2023

EDItOR’S nOtE

By Janet Levaux

Busy times for Advisors, Industry

fter serious turmoil in the banking sector, which even- and accelerating merger and acquisition activities, rather than
tually led UBS to buy Credit Suisse and JPMorgan from true organic sources, such as current clients depositing
A to scoop up First Republic Bank, the financial mar- incremental new assets and the onboarding of new clients.”
kets are now being rattled by concerns over whether talks in Welsh argues that advisors need to “regain the marketing
Washington will resolve issues with the U.S. debt ceiling by muscles they once had in their earlier, scrappier startup days.”
June 1. There were roughly two weeks left for some resolution Plus, it would be advantageous for them to “embrace a key
of this matter before we went to press in mid-May. business priority,” namely to “immediately relearn and rein-
Meanwhile in Washington, “Securities and Exchange vest in marketing their businesses using the tools of today’s
Commission exams of com- digital age.”
pliance with the agency’s “Advisors face a growing Advisors, of course, face a
new marketing rule are in full growing list of challenges,
swing, and enforcement actions list of challenges as the RIA as the RIA and other indus-
related to firms’ lax compli- try channels experience rapid
ance could be in the pipe- and other industry channels change — which we highlight
line,” explains Senior Editor experience rapid change.” in this month’s cover story,
and Washington Bureau Chief “Wealth Management in 2023:
Melanie Waddell in The Playing Charting a New Path.”
Field column this month. Overall, the SEC has signaled that it “The RIA space isn’t just growing in size,” according to
will likely have a heavy hand on marketing rule compliance, Marina Shtyrkov, associate director, wealth management at
she points out. Cerulli Associates. “It’s growing up and getting more mature
According to Sanjay Lamba, associate general counsel for and more sophisticated in terms of the types of firms that are
the Investment Adviser Association in Washington, the IAA in the RIA channel [and] the largest RIA firms control the vast
“very recently learned that the [SEC] exam staff has found majority of assets,” while employing over 60% of advisors in
serious [marketing rule-related] deficiencies on a large num- the sector.
ber of exams — with some being referred to the SEC enforce- Fortunately, advisors have lots of options when it comes to
ment staff.” Lamba noted that “it would be very unfair if these their future plans — and must weigh them carefully. “Many
deficiencies and referrals” relate to the agency’s updated FAQ firms will have to make some tough choices about whether
guidance issued in January. they want to compete with the biggest players, attempt to
Also, Amy Lynch, president and founder of FrontLine join them or stay independent,” says Heather Fortner, CEO of
Compliance, recently explained that firms that have “done SignatureFD, a financial advisory firm. “There’s no right path.
nothing” to comply with the new marketing rule are at risk of It’s all about leaning into the values and long-term goals you
facing an enforcement action, Waddell notes in her column. have as an organization.”
“That’s the kind of firm or activity that’s going to be a ‘gotcha,’
and the SEC will be likely taking enforcement against that type
of an entity,” Lynch said.
Another challenge facing advisors at present is growing
their businesses. As Tim Welsh of Nexus Strategy emphasizes
in his Industry Insights piece this month, “The majority of
recent ‘growth’ has been coming from market appreciation GROuP EDItOR-In-CHIEF

8 Investment AdvIsor June 2023 | ThinkAdvisor.com