Compliance: It’s More Than a Mandate, It’s a Mindset

Compliance: It’s More Than a Mandate, It’s a Mindset

SEC compliance
SEC compliance

Compliance rules. They’re not the most romantic subject, but that doesn’t diminish their importance. Yeske Buie is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”), and we take our role of maintaining compliance with the SEC’s regulations very seriously. Why? Obviously because these are legal requirements. But more importantly to us is that the mission of the SEC, first and foremost, is to protect Clients, and that’s a mission we whole-heartedly support. To our core, we believe in putting our Clients’ interests above our own, thinking and acting like a fiduciary at all times, and being ever mindful of the responsibility engendered by Clients’ trust.

In this space, we’ll review the compliance requirements set forth by the SEC, and share more about how these requirements are acted upon within Yeske Buie’s compliance program.

Investment Advisers Act of 1940

First, a little history. The Investment Advisers Act of 1940 is a federal law that regulates investment advisers. This act was one of several pieces of legislation passed during the era following the Great Depression and World War I to protect investors from fraudulent financial advice. While additional provisions have been (and continue to be) added over time, the Act continues to serve as the backbone for many of the foundational laws and regulations that are active today.

Documents and Policies and Disclosures – Oh My!

The evolution of financial advice – including the expansion of what, how, and where you can invest your money – has compounded the number of required documents, policies, and disclosures required for a financial advisory firm. Let’s review some of the most important documents related to our compliance program.

Form ADV

The Form ADV is a document that summarizes a firm’s business details including investment style, assets under management, key team members, conflicts of interest, and more. The information is shared in a uniform format across all firms, and are made available on the Investment Advisor Public Disclosure website and on the advisor’s website (ours are available here!).

There are three parts to the Form ADV:

  • Part 1: This is a fill-in-the-blank form that shares information about a firm’s business, ownership, Clients, number of accounts, number of employees, business practices, affiliations, and any disciplinary events. Firms are required to file the form by March 31 each year.
  • Part 2: This form is a narrative that further describes the firm’s business practices, fees, conflicts of interests, disciplinary action, and includes a supplemental brochure of information about each registered advisor on the team. Like the ADV Part 1, firms are required to file the form by March 31 each year. They are also required to deliver it to its Clients annually April 30.
  • Part 3: The ADV Part 3 (also known as the “Client Relationship Summary” or “CRS”) is a new requirement as of June 2020. The purpose of the form is to provide a brief (no more than two page) summary about the types of services the firm offers, the cost of those services, any conflicts of interest, the required standard of conduct, and any legal and disciplinary history. The SEC requires firms to send this form to Clients anytime they open a new account type and/or rollover funds into an existing account.

Other Compliance Documents:

  • Compliance Manual and Code of Ethics: Annually filed documents are informative, but we all know that dealing with one of the most potent forces in people’s lives is much more complex than any document. How, then, does a firm ensure that its day-to-day actions are compliant and in the best interests of its Clients? For us, the answer is making a commitment to compliance a part of the firm’s culture, and having curiosity and awareness towards developments and regulations, and consistent and approachable trainings and discussions with our team to breath life into our compliance process. Our Compliance Manual outlines everything from how we serve Clients, to portfolio management and trading, maintaining books and records, information security, and business continuity. As an aside, separate from SEC compliance, we are also required to adhere to the CFP Board’s code of ethics and standards of conduct in addition to the internal policies that we’ve set for ourselves.
  • Privacy Policy: As financial planners, our Clients trust us with some of their most personal information, and the SEC is committed to ensuring that firms make robust efforts to keep that information safe. Specifically, the SEC’s Safeguards Rule requires firms to “adopt written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer records and information.” Here’s a copy of Yeske Buie’s Privacy Policy.
  • Disclosures: Part of being a fiduciary is being honest, fair, and timely in disclosing relevant information to Clients. At Yeske Buie, this communication may come via our website (where you can find disclosures for awards, rankings, and other claims we’ve made), from our bi-weekly newsletter TheLiveBigWay® Digest, or one-off emails from members of our compliance team. If there’s ever something you’re curious to know more about, feel free to let us know.

We hope you’ve found this review of the SEC’s requirements and Yeske Buie’s compliance program to be useful (at the very least, that it helps you with any insomnia you are suffering). For our team at Yeske Buie, compliance is so much more than an annual filing or a 50-page document. It’s a mindset that comes with an unwavering commitment to serving others in a way that we ourselves would want to be served. If you have any questions about one of the above requirements or otherwise, please don’t hesitate to contact us.