The IAA Supports More Effective, Efficient, and Modern Regulation
Advancements in technology, evolving business models, and the growing need for businesses to adapt quickly to unexpected developments have underscored the need for a more modern and flexible regulatory approach. The IAA supports updating several areas of regulation under the Advisers Act to make the regulation of investment advisers more effective and efficient for advisers, their clients, and the capital markets.
Electronic Delivery
The IAA advocates for greater flexibility in how investment advisers deliver required disclosures to clients. We support changing the default from paper delivery to electronic delivery, with the option for clients to switch back to paper at any time. This approach would be more efficient and more secure and would better align with how today’s investors expect to receive communications from their financial professionals.
Safeguarding of Client Assets
The current Custody Rule, with its confusing and complex language, needs to be updated and simplified to better meet its objective to safeguard client assets and allow for ongoing adaptation as the landscape evolves. As part of this, the IAA urges the SEC to ensure that crypto assets are safeguarded with protections equivalent to traditional assets, including segregation, insurance, and strong operational controls. The SEC’s custody framework should be modernized to achieve consistent protection across asset classes, so a crypto asset is safeguarded with the same care as a stock or other traditional asset class, without creating unworkable barriers for advisers.
Political Contributions
The IAA has called for an update to the overly complex “pay-to-play” rule regulating political contributions by investment advisers. We agree with the SEC’s goal of preventing the “buying” of business through campaign contributions, but the current rule, which imposes heavy compliance burdens on investment advisers with severe penalties on a strict liability basis, is not well designed to achieve this policy goal. We support a more tailored approach that reduces these burdens while still achieving the rule’s objectives.