What role does compliance play with registered investment firms, and why is it important to you?

November, 2016 |

“What role does compliance play with registered investment firms, and why is it important to you?”

By: Jim Pratt-Heaney

Registered Investment Advisors have a fiduciary duty to their clients. This means that they have a fundamental obligation to act and provide investment advice in their clients’ best interest. For SEC-registered firms, the Commission dictates that Registered Investment Advisors “owe clients a duty of undivided loyalty and utmost good faith.”1 In order to comply with this important requirement, we believe it is crucial for a firm to have in place a solid compliance program. But what does that mean for you, the client? As a client, you should be confident that your selected firm has a compliance program which not only protects your assets, but also your information and privacy. At the same time, the firm should reveal any conflicts of interest and monitor its marketing and performance claims to ensure their accuracy. At Coastal Bridge Advisors, we take this responsibility quite seriously and have listed below the components of a strong culture of compliance that we think a client ought to look for in a firm:

1. Clearly Defined Compliance Program. Firms registered with the SEC are required to adopt and implement written policies and procedures that aim to prevent violations of the Investment Advisors Act of 1940. In many compliance programs, an appointed chief compliance officer will oversee a review of these policies at least once a year.

In our view, such policies should cover:
a. The portfolio-management process
b. Accuracy of disclosures made to investors
c. Internal and personal trading activity
d. Safeguarding of client assets
e. Creation and maintenance of required
books and records
f. Privacy protection of client records and information
as part of a data security plan
g. Trading procedures that address best execution
and soft dollar arrangements
h. The process to value client holdings and
fee assessment
i. Business continuity plans

2. Disclosure Requirements (Form ADV). Firms registered with the SEC must prepare and file certain disclosures via Form ADV, which for many advisors includes a written disclosure brochure that the advisor is also required to deliver to its clients. The disclosure brochure contains important information for clients, such as services provided, fees charged and custodian and broker dealer status. It is a requirement that this brochure be written in “plain English” and be available to the public. Clients should diligently read and ask any questions they have about the ADV before hiring a firm.

3. Code of Ethics. Firms registered with the SEC must have a code of ethics which sets forth the standards of business conduct expected of their employees, officers and directors and require compliance with federal securities laws. This code requires all members of the firm to report their own trades and investments to the chief compliance
officer, to prevent any use of insider information and to ensure that clients’ interests always come first.

4. Books and Records. Firms registered with the SEC are required to maintain certain books and records for specific retention periods. These records include business financials and accounting statements. These records also include investment advice and transactions in clients’ accounts, including orders, confirmations and written requests for funds and deposits.

5. Marketing and Advertising. To protect investors, the SEC has restrictions on how firms registered with the SEC may advertise their services and performance in various mediums. Any false or misleading claims are prohibited by the SEC. Every chart, graph and performance number should be represented in a clear manner and be substantiated by reportable records. For example, when illustrating a set of returns, the advisor generally must note whether the results are inclusive or noninclusive of fees.

Selecting a wealth advisory firm is a significant decision. As such, we think prospective clients should delve beyond the performance and services provided by an advisor and carefully examine the compliance structure that the advisor has in place. In our view, a quality firm should be proud of its compliance and regulatory procedures and be glad to review them with you. For the safety of your assets and your privacy, we feel it is paramount that you not underestimate the importance of a strong culture of compliance.

*While this article generally discusses requirements for SECregistered firms, state-registered firms are often subject to many of the same or similar requirements. Registration with
the SEC as an investment advisor does not imply a certain level of skill or training. Disclosure: This article is provided by and has been paid for inclusion in Worth magazine by Coastal Bridge Advisors (“Coastal Bridge Advisors”), an SEC registered investment adviser with its principal place of business in the state of Connecticut. Any reference to or use of the terms “registered investment adviser” or “registered,” does not imply that Coastal Bridge Advisors or any person associated with Coastal Bridge Advisors has achieved a certain level of skill or training. This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. Certain information in this article has been derived from thirdparty sources. While we believe these third-party sources to be reliable, we cannot guarantee the accuracy of any such information. Additionally, this article contains certain forward-looking statements that point to future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the results portrayed in such forward-looking statements. As such, there is no guarantee that the views and opinions expressed in this article will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. For additional information about Coastal Bridge Advisors, including fees and services, send for our disclosure statement as set forth on Form ADV from Coastal Bridge Advisors using the contact information herein or visit www. adviserinfo.sec.gov. Please read the disclosure statement carefully before you invest or send money.

 

To download the full PDF version click here: What role does compliance play with registered investment firms, and why is it important to you

Jim Pratt Heaney

Chief Compliance Office and Chief Investment Officer,  (CIMA®) Jim is one of four founding partners of Coastal Bridge Advisors with over 30 years of experience in the financial services industry.  As Chief Compliance Officer, Jim oversees Coastal Bridge Advisors business operations ensuring all are compliant with SEC regulation.  As Chief Investment Officer and a Certified …

Jim Pratt-Heaney full bio >

Coastal Bridge Advisors has been named the Best Private Wealth Manager Under $5B by Private Asset Management

Learn More >https://www.coastalbridgeadvisors.com/coastal-bridge-advisors-wins-prominent-industry-award-for-best-private-wealth-manager-under-5b-2/

PAM Recognizes Coastal Bridge Advisors as Best Private Wealth Manager Under $5B

For the second year in a row, Coastal Bridge Advisors has been named the winner of the 2018 “Best Private Wealth Manager Under $5B” by Private Asset Management Magazine (PAM).

Westport, CT – February 21, 2018 – Coastal Bridge Advisors, an independent wealth management firm with approximately $2.5 billion in client assets, is proud to announce it has been named the winner of the 2018 “Best Private Wealth Manager Under $5B” by Private Asset Management Magazine (PAM). The PAM Awards recognize top investment professionals, wealth advisers, legal firms, consultants and other key service providers in the private asset management space across a number of award categories. This is the second time in as many years that Coastal Bridge Advisors has been recognized by PAM with this award.

“Every day our team is hard at work seeking to deliver value-added advice and superior service to our clients,” said Jeff Fuhrman, President of Coastal Bridge Advisors. “While the strongest accolades come from the continued trust and confidence of our clients, we are honored to have earned this prestigious award. It is particularly gratifying to have been recognized for the second year in a row, affirming the continued dedication and contributions of the Coastal Bridge Advisors team.”

In 2017, Coastal Bridge Advisors also won Best Private Wealth Manager Under $5B and in 2014 was the winner of the Best Multi Family Office Overall. The 2018 PAM Awards were presented at its annual awards dinner where Coastal Bridge Advisors was also named as a finalist in the Best Private Wealth Manager for Client Service Under $5B category.

PAM is a leading publication that reports on the wealth management and family office industry. Now in their eighth year, the PAM Awards are judged by an independent panel of industry experts, who evaluate a mixture of qualitative and quantitative performance indicators to select the winners. Judges are carefully selected for their wealth of experience and expertise, as well as their absence of conflicts of interest.

About the PAM Awards:

The 2018 and 2017 Award for the Best Private Wealth Manager Under $5B category were determined based on the following criteria:

  • Financial Progress (performance track-record over the course of the last twelve months);
  • Growth (client numbers, internal hires and geographic expansion);
  • Client Satisfaction (evidence of client satisfaction, including evidence of exceptional service and direct client statements); and
  • Product Innovation (details of new services and products launched over the prior year).

The 2014 Award for the Best Multi-Family Office Overall was determined based on the following criteria:

  • Commercial Success and Business Growth;
  • Positive Client Feedback via Submitted Testimonials;
  • Description of new product, its genesis and how it was created; and
  • Demonstration of Product Innovation.

PAM does not release statistics on the number of firms competing.

Please note that Coastal Bridge Advisors receipt of the award may not be representative of any one client’s experience because the award reflects an average of all, or a sample of all, of the experiences of the firm’s clients and that Coastal Bridge Advisors’ receipt of the award is not indicative of the firm’s future performance.

Coastal Bridge Advisors has been named the Best Private Wealth Manager Under $5B by Private Asset Management

For the second year in a row, Coastal Bridge Advisors has been named the winner of the 2018 “Best Private Wealth Manager Under $5B” by Private Asset Management Magazine (PAM).