Year-End Review

Rule 206(4)-7 in the Investment Advisers Act of 1940 requires RIAs to adopt policies and procedures ("P&P"), that should be reviewed annually. Read your P&P and answer these questions:

* Did any compliance matters arise this year that need addressing in the P&P to prevent future occurrences? (compliance monitoring, violations, deficiency letters from regulatory or mock exams, employee warnings or customer complaints/lawsuits)

* Did you change your business activities or determine any conflicts of interest? (change in ownership or key personnel, new services and fee structures, new investment vehicles, new computer systems and business relationships with third parties)

* What regulatory changes occurred last year? (law updates, enforcement actions you've read about or new regulatory opinions published)

* In general, do the P&P appear to be effective?

A compliance calendar can help track when and how to conduct required periodic P&P reviews.

Nancy Lininger (www.liftburden.com) is the founder/consultant of The Consortium, which provides compliance and marketing consulting to investment advisors and broker-dealers. She is also the publisher of CompliancE-News.