In a recent regulatory newsletter to registered investment advisers (RIAs), the Colorado Division of Securities (the Division) provided guidance to RIAs that offer ongoing financial planning services under a fixed or flat retainer fee. The Division reminded RIAs that take this holistic and goal oriented approach to keep in mind the following important compliance best practices:
- First, the advisory contract should clearly define the services that will be provided, specifically the work product or deliverables that the client will receive throughout the year, and how much those services cost.
- Second, the RIA must monitor that the services have actually been completed. If not, the RIA may owe the client a refund for any unearned fees.
- Third, the RIA should document all services that have been provided. This should include a summary of client meetings and record of each phone conversation and email with the client in which those contracted financial planning services are provided.
- Finally, the RIA should clearly disclose to clients, on an itemized statement, invoice or report, the services that have been provided for a fee.
The Division stated that they will continue to work with financial planners that offer such services and offer more detailed best practices over the coming months. Although this guidance was provided by the State of Colorado, RIA Compliance Group recommends that all clients remain mindful of these recommendations when offering ongoing financial planning services under a fixed or flat retainer fee.
About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Delray Beach, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.