Today, we offer our “Friday List,” an occasional feature summarizing a topic significant to investment management professionals interested in regulatory issues. Our Friday Lists are an expanded “Our Take” on a particular subject, offering our unique (and sometimes controversial) perspective on an industry topic.
We made it down to Hollywood, Florida this week for Inside ETFs, the annual self-congratulatory industry confab of everything ETFs. We saw issuers big and small, service providers, advisers, and technologists. There were also some pretty cool special guests like Barney Frank and Derek Jeter. We took in a lot of information over three days of sessions and networking. For those that couldn’t make it (or for those that may have, ahem, missed a few of the sessions), we offer the ten most interesting things we learned at the conference.
10 Interesting Things We Learned at Inside ETFs
- Zero fees: Competition helps firms with scale but investors should consider hidden costs.
- Service matters: Many investors/RIAs are willing to pay more for service.
- Quality: Low expenses get you in the game, but performance may ultimately keep you there.
- Active and non-transparent: Active ETFs are not new, but non-transparent ETFs are changing the industry.
- ESG. ESG is a screen applied to almost any equity strategy rather than a strategy unto itself.
- Model portfolios. Model portfolios are better tools that RIAs can use; they don’t replace the RIA.
- Niche marketing. Smaller firms have to define a niche to attract clients. A niche is a small enough cohort to differentiate but large enough to sustain growth.
- Fixed income. With uncertain economic conditions, fixed income ETFs are likely to become a more significant part of the industry.
- Mission investing. Interest group-focused products such as the LGBTQ fund will target investors looking to use their money for more than just yield.
- Our daughters will rule the world. Julian Guthrie’s Alpha Girls provides a “see it so you can be it” template for high-performing women in male-dominated industries.
Bridget Garcia of Cipperman Compliance Services recently attended the Futures Industry Association Law and Compliance Conference in Washington. The well-attended event addressed cryptocurrencies and related regulation, a major issue of interest to the industry. Panels discussed the evolution and purpose of cryptocurrencies and how the CFTC, SEC and FINRA will carve up regulatory responsibilities. Moving onto more tactical matters, one panel discussed regulatory hot topics, including AML and GDPR, and another panel tackled CCO responsibilities. Day 3 focused heavily on swaps and derivatives. Feel free to contact Bridget if you want more information.
Link to conference summary
Ray Calvano of Cipperman Compliance Services recently attended the FINRA Annual Conference in Washington. Major speakers included FINRA President and CEO Robert Cook and SEC Chairman Jay Clayton. Mr. Clayton cited the SEC’s continuing concerns about cryptocurrencies and ICO offerings. He also tried to offer some insight into the new Regulation Best Interest and what it means for broker-dealers. The Conference also addressed how FINRA could tailor its regulations to the needs of smaller firms. Feel free to contact Ray if you want more information.
Link to forum summary
Joe Scavetti of Cipperman Compliance Services recently attended the Investment Adviser Association Compliance Conference in Washington. The conference brings together senior regulatory officials and compliance professionals to address cutting-edge regulatory issues. Linked below is a more detailed summary of the meeting prepared by Joe, who would be happy to discuss with you in more detail. SEC Commissioner Hester Peirce, the conference headliner, spoke at length about the SEC’s regulatory agenda including the prospect of an SEC conduct rule. SEC officials Peter Driscoll, Director of OCIE, and Stephanie Avakian, Co-Director of Division of Enforcement, also participated, offering their views on examination and enforcement priorities. Over the course of 2 days, several panels addressed issues such as mutual funds, cybersecurity, vendor management, advertising, Form ADV, custody, and SEC exams.
IAA Compliance Conference Report 2018
Emily Silva and Bridget Garcia of Cipperman Compliance Services recently attended the Philadelphia Compliance Roundtable meeting that included presentations by the Investment Adviser Association about its regulatory priorities and Morgan, Lewis & Bockius about SEC and FINRA Enforcement Trends. Linked below is a more detailed summary of the meeting prepared by Emily and Bridget, who would be happy to discuss with you in more detail. Representatives of the IAA said that they would advocate for a uniform fiduciary standard, simplification of the custody rule, and protecting customer information. The Morgan Lewis lawyers outlined recent enforcement trends including protecting retail investors, undisclosed compensation, anti-money laundering, and compliance. The Roundtable is a group of Philadelphia-area investment compliance professionals that meets periodically throughout the year to discuss compliance best practices.
Philadelphia Roundtable Session writeup – Sessions 1 and 2- FINAL DRAFT