NorthStar Blog


Tech Tip Tuesday: Archive Reports, File 13F Reports, and Restore Canceled Accounts

We want to provide our clients with the resources needed to get the most out of the Orion Connect platform. To do this, our subject matter experts have highlighted some best practices to help solve everyday issues and continue growing your business quickly and at scale.

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Expected Stock Market Returns = World Cup Champion?

Content Provided by Michael Hadden – Junior Research Analyst The world’s attention will stay tuned to Russia over the next month as the 2018 World Cup has officially begun. The 2014 World Cup final alone drew more than a billion viewers, with the entire competition reaching an in-home audience of 3.2 billion people. There’s no...

Selecting the Right Tech Partner: Advice from Orion’s Breakaway Resource Center

More advisors are going independent, and Orion’s Breaking Away Resource Center offers helpful best-practice, advice and resources for advisors looking to make a leap in their career.

The post Selecting the Right Tech Partner: Advice from Orion’s Breakaway Resource Center appeared first on Orion Advisor Services.


Why the Destination is Highly Dependent on the Journey

“Life is a school of probability.” — Walter Bagehot Content Provided by Joe Smith, CFA – Senior Market Strategist What will the markets return in the next 12 months? Should investors expect 20% gains per year in the future? Will the markets correct by more than 10% in the next six months? We frequently encounter...

Reason #29 Not to Use Stock-to-Bond Ratios to Manage Risk

Income-Based Portfolios Which portfolio would you expect to be riskier? A or B? Or, put another way, which portfolio would you expect to be more volatile?   Tough call, isn’t it? They both look very similar in terms of stock-to-bond ratios. Let’s call it a wash — they both hold the same risk. How about...

Return Drivers of Commodities

Content Provided by Jackson Lee, CFA, Quantitative Investment Research Analyst “Be Creative” is a new CLS Investment Theme that was introduced the beginning of this quarter. To recap its introduction, “Be Creative” means CLS will add more exposures to asset classes such as alternative and real assets. The benefits of investing in these segments rather...

Sun, Sand & Scalable Advisor Tech: Here’s Why You Won’t Want to Miss Ascent 2018

Here are just a few reasons why Ascent 2018, held September 5-7 in Miami Beach is one event you won’t want to miss.

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Perfect Fit

Content provided by Robyn Murray, Freelance Writer When Michael Hadden first interviewed at CLS Investments, there were no positions open for him — but he got a call back anyway. At a company that prides itself on a family-first culture and a passion for investing and helping others, Hadden was too perfect a fit to...

Orion Bi-Weekly: New Product Updates, Ascent Early Bird Pricing, Compliance Insights and More!

What's new with Orion? In this update, you'll find what you need to know about our latest software update, how to save on the cost of Ascent registration, what new integration can simplify your CRM and more!

The post Orion Bi-Weekly: New Product Updates, Ascent Early Bird Pricing, Compliance Insights and More! appeared first on Orion Advisor Services.


The Important of SEC Mock Exams

Recently, the U.S. Securities and Exchange Commission (SEC) has been showing up unannounced at registered investment advisors’ (RIA) offices to conduct surprise investigations in order to:

  • Better understand how an RIA operates on an everyday basis.
  • Avoid allowing the RIA to “clean up” its compliance program and records after receiving notice of an impending SEC exam and a document request letter.

Since many RIAs believe they would flunk an SEC exam1 and their senior executives question whether their firm can satisfy SEC examiners’ expectations, this new tactic is causing understandable concern among RIAs.

Overall, the SEC has been ramping up the frequency of its examinations in the last few years – in 2011, it conducted exams on 8% of RIAs; in 2017, it conducted exams on 13% (1,614 firms).

In 2016, of the 1,477 firms audited:

  • 72% resulted in a deficiency
  • 27% resulted in a “significant finding”
  • 9% were referred to enforcement2

RIAs are particularly anxious about these exams since they often lack a clear understanding of the SEC’s exam priorities. Though the SEC has not released its 2018 priorities list, it stated that it would focus on the following in 2017, among others: protecting retail investors (including a focus on “robo-advising” and wrap fee programs); identifying potential exploitation of senior investors; RIAs’ compliance with SEC Regulation Systems Compliance and Integrity (SCI) and anti-money laundering rules; FINRA operations and regulatory programs; and cybersecurity.3

How should an RIA prepare for a surprise or a scheduled SEC exam?

Conducting an “SEC mock exam,” during which internal staff or a third party simulates the type of exam the SEC would administer, can help ensure that you’re as prepared as possible. Specifically, a mock exam should identify:

  • Potential weaknesses in compliance programs and controls.
  • Appropriate steps your firm should take to enhance those controls and update policies and procedures.

Specific steps to prepare:

  • Review any recent SEC exam request letters and confirm that you can produce the required documents and data. Are your records readily accessible? Can you prepare requested reports promptly in the format requested?  Do you have the personnel and/or expertise to understand SEC information requests and “SEC hot buttons?”
  • Review any prior SEC communications, including SEC exam deficiency letters and the steps you said you took orwould take to address the deficiencies. If you did not address one, do so now.
  • Review your current business model, including any changes in businesses, products, operations, and personnel, against your current controls, policies, and procedures. Do your policies and procedures accurately reflect your business and control structure?
  • Assess the ability of all your employees to prepare for and respond to an SEC exam and the examiners. Educate your employees about proper ways to respond both orally and in written form.
  • Determine the project management tools your firm has to appropriately manage a multiplemonth SEC exam withmultiple data requests. How will you track the responsive materials provided to the SEC and the multiple follow-up document requests? Develop a tracking matrix and ensure you have the ability to “Bates Stamp” your responsive documents.
  • Assess the expertise your firm has to work with the SEC during your exam, and draft appropriate responses toSEC recommendations and observations.
  • In order to avoid potentially negative consequences, consider hiring an expert to partner with and manage yourSEC exam to a successful and minimallyinvasive conclusion. An expert compliance consultant, such as Northern Lights Compliance Services, LLC (NLCS), can manage a mock SEC exam, prepare assessment results, and partner with you to enhance your compliance program and controls, including your policies and procedures.

1) Gap Found in Managers’ Confidence in Compliance Programs – Survey, Rick Baert, August 11, 2017