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SRO oversight could be ‘rude awakening’ for some advisers: Consultant

Scrutiny of client communication, use of social media could catch some investment advisers unaware

Advisers who follow the rules shouldn’t worry about major changes in how they communicate with clients if the Financial Industry Regulatory Authority Inc. takes over adviser oversight, said Andrew Gluck, chief executive of Advisor Products Inc.
Mr. Gluck, whose company produces content and websites for advisers, spoke on Wednesday at the TD Ameritrade Institutional national conference in San Diego.
When asked what he thought Finra oversight might do to advisers’ social media efforts, Mr. Gluck gave a surprising answer.
“Not that much,” he said. Software tools that broker-dealers use to track registered representatives’ use of social media for business can be equally applicable to advisers, Mr. Gluck said.
Mr. Gluck thinks Finra will take over adviser oversight because it has the self-funding the SEC lacks. (What are your views on an SRO? Take our quick survey.)
Most RIAs are playing by the rules now, he said, and shouldn’t have to change their practices if they become subject to Finra oversight.
In an interview with InvestmentNews, the adviser who asked Mr. Gluck the question disagreed, saying that Finra would impact advisers’ marketing efforts and client communications.
This hybrid adviser, a veteran of the securities industry, asked not to be identified.
He thinks most advisers don’t realize the risk because they’ve never dealt with the self-regulator.
Indeed, Mr. Gluck later acknowledged that increased oversight — whether by Finra or another regulator — “will be a rude awakening for a lot of guys.” He said many advisers have been lax in following a variety of existing rules.
Advisers who report performance numbers on their websites, for example, or mention specific securities in their market updates, could be violating regulations, he said.
Loose handling of personal client information is also a problem, Mr. Gluck said.
Some advisers “can get away with it because the SEC isn’t looking,” he said.
If Finra cleans up some lax practices, “that’s good, that’s not bad,” Mr. Gluck said. “At least once a month we submit content to Finra,” Mr. Gluck added. He hasn’t had problems getting approvals, he said, because he knows what is permissible.
“A lot you can talk about [with brokerage customers],” he said, “like financial planning topics.”