As recently reported in the Investment News, the North American Securities Administration Association (NASSA) reported on the results of state coordinated examinations. The relative good news was that there were 30% fewer deficiencies from 2013 to 2015.
- Not adequately documenting the suitability of investment recommendations being the biggest concern.
- Failing to adequately explain fees in contracts.
- Inconsistencies in the FORM ADV Parts 1 and 2.
- Charging fees not as outlined in the Form ADV.
- Improper client invoices for direct-fee reduction.
If you are a state-based advisor, you should be asking yourself if you have any of these deficiencies. If your conduct falls within any of these areas of deficiency, you should take action now to correct them, or face regulatory exposure in the future.