Page 30 - Investment Advisor - December 2021

NEWS of the YEAR

since early May, but compliance experts are cautioning advi- ments and presentations with testimonials and endorsements,
sors to tread carefully when using testimonials and endorse- including increased use of social media.”
ments before the rule’s Nov. 4, 2022, compliance date. In October, the SEC announced that investment advisors
The use of testimonials and endorsements “before the firm can no longer rely on a host of SEC staff letters that provided
is fully compliant and updating its compliance [policies and guidance on how to comply with the agency’s current advertis-
procedures] … that is a huge risk to the firm,” Amy Lynch, ing and cash solicitation rules.
founder and principal of FrontLine Compliance, said on a The SEC’s Division of Investment Management recently
webcast held by ThinkAdvisor. issued an update on its new Marketing Rule, amended Rule
Daren Domina, a partner in the Investment Management 206(4)-1, stating that it was rescinding a bevy of SEC Staff
and Private Equity Practice Groups at Haynes and Boone Letters that provided guidance.
in New York, who also heads the Broker-Dealer Regulatory “Many of the positions taken in those guidance documents
Practice Group, added that “because of the Marketing Rule’s have been incorporated into the rule and others have been
permissibility of use, I expect to see more advisor arrange- modified or rejected,” the SEC’s IM division said.

Retirement News

n Oct. 13, the annual cost-of-living adjustment, or COLA, However, Stephen Goss, SSA chief actuary, during a panel
Ofor Social Security benefits in 2022 was announced by the discussion held by the Bipartisan Policy Center directly after
Social Security Administration: 5.9%. This will be the largest the announcement, warned that people shouldn’t expect big
increase since 1982. annual COLA raises to become a trend.
“This would be the highest COLA that most beneficiaries liv- Further, he said that just as important as the COLA was the
ing today have ever seen,” said Social Security and Medicare pol- average wage index or AWI, as it affects how benefits are calcu-
icy analyst Mary Johnson of The Senior lated at retirement age. “That’s significant
Citizens League, noting that inflation pat- because individuals becoming newly eli-
terns caused by the COVID-19 pandemic gible for benefits in 2022 will have their
are “unprecedented” in her experience. benefit formula adjusted by the average
The COLA was based on third- wage index,” Goss said, adding that a year
quarter inflation data, and spotlighted or so ago before the pandemic took hold,
rising inflation. many didn’t expect the AWI to rise.
The Consumer Price Index, Although many factors are affected
announced that morning by the Labor by this increase, he said, one is the tax-
Department was up 5.4% in September able maximum dollar amount that will
versus the year prior and up 0.4% from be adjusted, up to $147,000. Goss made
August. (The CPI includes food and energy.) clear the AWI, which is based on actual 2020 W-2 forms from
Key components of the increase included the energy index, all U.S. wage earners, increased 2.8% from a year earlier.
which rose 1.3 % from the previous month, mainly due to the Regarding the current COLA, Goss stated that “anybody
gasoline index, which rose 1.2%, and fuel oil, which rose 3.9%. who is currently in receipt of benefit obviously should take a
The food index rose 0.9%, and new vehicle prices increased look at what their benefit is and imagine what a 5.9% increase
1.3% from the previous month. will do to that benefit level.”
“Over the past 21 years, COLAs have raised Social Security Goss also explained that in 2008, during the third quarter
benefits by 55% but housing category costs rose nearly 118% “we had this large increase in fuel prices that really created,
and health care costs rose 145% over the same period,” largely, that 5.8% COLA by December of that year, and then prices
Johnson said. In other words: A Social Security benefit that dropped back pretty substantially. And because of that drop back … Thiel: Kiyoshi Ota/Bloomberg
grew to $1,262.40 per month in 2021 from $816 in 2000 should there was a much lower CPI over the next couple of years,” he said.
have grown to $1,671 to keep up with rising costs, according to However, for now, he says indicators show in the future
the advocacy group. “we’re not likely to have a dramatic correction down … we’ll

28 INVESTMENT ADVISOR DECEMBER 2021 | ThinkAdvisor.com