On December 12, InvestorCOM hosted a webinar, with the wealth industry’s most trusted and seasoned experts, titled Understanding SEC’s 2024 Exam Priorities & Enforcement Agenda.

Mentioned below is a summary of insights drawn from the conversation. You may watch the complete webinar here.

Parham:

SEC’s April 2023 bulletin on the Care Obligation feels like light years ago – the guidance note will be a good stepping stone for what firms in the industry can expect. The SEC goes as far as saying that the core Duty of Care principle laid out under Reg BI also applies to investment advisors.
This segues into another point. The SEC’s Department of Exams goes on to highlight investment advice provided to clients with regard to products, investment strategies and account types.
Armin, what do you think is really the cause of concern behind account type recommendations that pops up throughout this document?

Armin:

Yeah, it is interesting. You know, I would say “time will tell”, because obviously they’ve listed it as an exam priority – So we’ll see what the SEC was looking for as the results of some of the exams coming up in 2024 start to be published. I would say that the account type, realistically speaking, has been, from a historical perspective, part of what an adviser who is a fiduciary should take into consideration. There are different account types that offer different benefits and may have different costs associated with them, or, things that are material to the investor, and so, certainly, while we traditionally think about things like the investment advice – the recommendation to place the investments into a specific type of an account should be considered as something that falls within the fiduciary obligation.
I think the SEC is kind of moving towards the FINRA side just ever so slightly in that aspect. And, that’s probably what’s going on here is that the commission wanted to make sure and highlight that account type is something that should be considered. Realistically speaking, I think we are seeing a convergence among different Regulatory Agencies. The Department of Labor certainly highlighted account types as a