Regulatory Round Up - July 2024

The Division of Examinations 2024 exam priorities for investment advisers stressed the importance of an adviser’s duty of care and duty of loyalty to their clients as a fiduciary. True West has seen several exams year to date focusing on this 2024 priority. An adviser must prioritize the best interests of their clients ahead of their own interest. Additionally, an adviser is required to make full disclosure of any conflicts of interest which might entice the adviser to provide advice not in the best interests of the client.

Let’s look at recent Exam Focus Areas

• Investment Recommendations provided to clients including unconventional strategies, high-cost products and/or complex products (i.e. leveraged EFTs, REITs).
  
  
• Methodology utilized to determine the best investment advice is provided based upon the investment profiles of each client captured in adviser’s policies and procedures. Areas of focus include:
  • Suitability Determinations
  • Best Execution
  • Cost and Risk Evaluation
  • Identifying and Mitigating Conflicts of Interest
• Compensation incentives that may entice an adviser to provide investment advice that serves their financial interests rather than the best interest of clients.
  
  
• Disclosures of any material conflicts of interest associated with investment advice, allowing clients to provide informed consent of the conflict.