The financial market is ever changing and this requires all the individuals involved in the market to adapt to these changes. With the recent financial crisis, many rules and regulations have been put in place to regulate various financial sectors. The article “compliance update in plain English” evaluates the laws that have been put in place to control the investment advisors in the United States (Christina, 2012). The article then concludes by giving suggestions on what the investment advisors should do to ensure that they comply with the laws before the deadline is attained.
The article analyzes the law that any financial advisors who manage assets worth between 25 million dollars to 100 million dollars are supposed to withdraw their registration from securities exchange market. They are expected to register themselves in one or more of their respective states. It is foreseen that this regulation is likely to affect many of the registered advisors in the United States. In addition, any firm that is not affected by this regulation is required to ensure that it meets all the requirements of the securities exchange market (Christina, 2012).
The reason for this move according to the article is that the number of the financial advisors has go up and given the resources that are allocated to the securities exchange market, managing all these advisors is difficult. An example is given whereby it has found that during the year 2011, the security exchange commission was only able to examine 9 percent of the financial advisors that are registered. This means that there is a possibility that there are many unqualified financial advisors in the market. To ensure that these individuals are examined, there is a need to have other organizations in the states that can examine these financial advisors.
The article also gives a reason why the custody rules have been revised. There have been many financial advisors who have fraudulently stolen the assets of their clients. This is witnessed by the number of the cases that have been reported relating to this issue in the year 2011. In response, the custody rules have been revised requiring the financial advisors to have qualified individuals to control the assets of the clients and financial statements showing the status of these assets should be sent annually to the clients. If an independent individual is not in charge of the assets belonging to the clients, a public accountant who is independent should assume the task and the internal controls of the firm should prove to be strong (Christina, 2012). The financial advisors are also required to take a random exam any time within a year to ensure that they have the necessary skills and abilities.
The article also informs that financial advisors are required to give detailed report about themselves n English so that their clients and other potential clients can read and understand this information. Some of the information includes their qualifications and any matters relating to the disciplinary actions taken against them.
The article concludes by describing the major areas that the financial advisors should observe. They should ensure that they do the necessary disclosure effectively, ensure that any information about a certain client is kept secret and that they are well prepared for the exams that have no set dates (Christina, 2012). The author advises that more regulations are expected and the advisors should be ready to comply with them within the shortest time possible.
The article is well developed in that it has a good introduction that gives the thesis that is developed. The points in the article are clearly supported in a way that makes individuals to easily understand its contents. The language used is simple such that anybody is able to get the message in the article. The conclusion is comprehensive and therefore appears educative even for individuals who read it alone. Therefore this article can be recommended to any individual who needs information about the changes in the financial markets.
References.
Christina, N (2012) Compliance update in plain English. Retrieved from; http://www.fpanet.org/journal/CurrentIssue/TableofContents/ComplianceUpdateinPlainEnglish/
