Registered Investment Advisers (RIAs) in the United States are bound by fiduciary duty, a legal standard enforced by the Securities and Exchange Commission (SEC), which requires them to act in the best interests of their clients.
RIAs must avoid conflicts of interest and provide full transparency on all material facts to clients and prospects. To demonstrate adherence to these expectations, RIAs must have rigorous compliance programmes tailored to their business operations.
MCO (MyComplianceOffice), which unifies key compliance functions in a single system, recently offered a checklist for RIAs.
Compliance responsibilities span a broad spectrum of obligations under the Act and associated rules. Among the essentials is the adoption of a Code of Ethics under Rule 275.204A-1. This code must be written, enforced, and include policies to prevent insider trading.
Additionally, advisers must develop detailed policies and procedures as outlined in Rule 206(4)-7, designate a chief compliance officer, and conduct annual reviews of the programme’s effectiveness.
Business continuity planning is another key component. Firms are expected to safeguard client interests in events such as natural disasters or the loss of essential staff. RIAs must also stay current with disclosure obligations, including regular updates to Form ADV filings under Rule 204-1, which is used for both SEC and state registration. Moreover, firms are subject to routine examinations under Section 204 to assess their adherence to regulatory standards and the adequacy of their compliance infrastructure.
Political donations are also regulated under Rule 206(4)-5, which restricts compensation following contributions to public officials. The rule includes strict guidelines even if an individual becomes a covered associate after a political donation is made.
This is just a small snapshot of the compliance requirements RIA’s need to be aware off. MCO also outlines books and records, best price and execution, advisory contracts and much more.
To manage this increasingly complex compliance landscape, automation and technology are becoming vital. Manual processes alone are no longer sufficient to prevent violations or respond effectively to audits. Solutions like MCO’s Know Your Employee (KYE) and Know Your Third Party (KYTP) platforms support firms in monitoring employee and third-party behaviour, facilitating approvals, maintaining records, and ensuring full implementation of policies.
With regulatory pressure rising and new rules on the horizon, RIAs must invest in scalable compliance solutions and prepare their operations to meet both existing and emerging expectations.
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