Recapping The NASAA 2023-24 State-Registered Investment Advisers Report
In its most recent annual report, the North American Securities Administrators Association (NASAA) outlined the regulatory landscape of the state-registered investment adviser industry. The 2023-24 state-registered investment advisors report highlights the ongoing efforts of state securities regulators to support state-registered investment advisers across the U.S., many of whom are small to mid-sized businesses.
According to the NASAA report, there are currently 27,796 total State-Registered investment advisers during the 2023-24 period - a net increase of 280 registrations from last year’s report. Total assets under management of all state-registered advisers exceeds $361 billion from over 838,600 customers. The vast majority of State-Registered Investment Adviser Firms had between 1 to 10 total employees, with 82% of all registered firms having between 1 to 2. Given these statistics, the NASAA report identified a number of target areas for improvement in RIA management and compliance
Cybersecurity and Technology Project Group
The Cybersecurity and Technology Project Group reported significant strides in restructuring and strengthening its cybersecurity efforts. By leveraging NASAA Spaces, the group has streamlined its work and is actively reassessing the current cybersecurity landscape, focusing on the resources available through industry trade associations. The Group’s goal is to align their initiatives with NASAA's Board-level Cybersecurity Committee to promote the adoption and further development of NASAA’s cybersecurity model rules.
The Group also dedicated time to support state-registered investment advisers with practical tools and guidance for enhancing cybersecurity. They plan to provide advisers with simple, actionable steps that can immediately improve security, often by better-utilizing features already available in their existing platforms. Please our website for updates on the NASAA Cybersecurity and Technology Project Group’s updates for RIA information security practices and resources.
Operations Group Project
The Operations Project Group has been focused on increasing the adoption of NASAA’s web-based Examination Module system, known as NEMO. To do this, they collaborated with NASAA’s NEMO Training and Support Committee and the Corporate Office to draft a survey aimed at understanding why some jurisdictions aren’t utilizing the platform. The survey results will help identify potential changes to NEMO’s content and improve the overall user experience.
Beyond this, the group has been actively discussing emerging issues for investment advisers, such as the rise of FinTech services, third-party compliance consultants, and unlicensed assistants placing trades. The Operations Group will be monitoring such activity for guidance to state RIAs on these and other topics.
Regulatory Policy & Review Project Group
The Investment Adviser Regulatory Policy and Review Project Group has been developing and discussing policies based around investment adviser regulation over the past year. Topics have included fee models, marketing, cybersecurity, artificial intelligence, custody of client assets, and recordkeeping. They’ve also focused on initiatives like Investment Adviser Representative Continuing Education (IARCE), trusted contacts, and digital asset recommendations.
The Group has gathered input on model rule proposals, particularly around advertising and trusted contacts, while continuing to create new rules for other areas. Their main priorities in the future include finalizing several model rule proposals and guidance documents, with the goal of presenting these to NASAA members and the public in the coming year. RIAs often need greater guidance on the use of trusted contact and senior abuse policies to protect aging clients against financial abuses.
Resources & Publications Project Groups
Earlier in 2024, the Group issued compliance articles on key topics like suitability, common examination deficiencies, and disclosure of outside business activities to assist state-registered RIAs in managing client accounts and updating compliance practices. Additionally, the Group produced a well-received training session at NASAA’s Investment Adviser Training in April, focusing on examination procedures and effective communication. Resources from the training are available on our website.
Training Group Project
The Investment Adviser Training Project Group is responsible for three key initiatives: conducting an annual training, hosting webinars, and updating the core content of NASAA’s Investment Adviser Training Tracks. This year’s annual training took place from April 16-18, 2024, in Minneapolis, Minnesota, as a hybrid event, with over 400 participants attending in-person and virtually. The event, which included a concurrent Licensing and Registration Training, required months of planning and coordination with various teams to ensure a smooth experience.
In addition to the training event, the group hosted a webinar on July 17, which continued the conversation from a popular session on emerging practices for investment advisers. The session had high engagement, and the group plans to host two more webinars later in 2024.
Lastly, the project group completed a thorough review and update of NASAA’s Investment Adviser Training Track, enhancing the modules and questions to better serve regulators and advisers. Training seminars offered by this Group provide state RIAs with excellent tips on compliance procedures and regulatory audit initiatives.
Zones Group Project
The IA Zones Project Group, composed of eight members representing NASAA’s eight zones, plays a crucial role in fostering communication and information-sharing among NASAA jurisdictions. They manage electronic communication systems and host quarterly calls to keep members updated on key issues, trends, and best practices in the investment adviser space.
In early 2024, the group compiled survey results for the IA Training Project Group and plans to distribute additional surveys throughout the year, supporting NASAA’s Resources and Publications Project Group and the IA Annual Survey. During the first two quarters of 2024, the group held seven successful quarterly zone meetings, helping jurisdictions stay connected on examination trends despite remote work environments.
At the 2024 Investment Adviser Training in Minneapolis, IA Zones led breakout discussions on a variety of topics, including compensation models, suitability issues, and emerging investment products like cryptocurrency. For those unable to attend in person, the group plans to host three virtual breakout webinars in August 2024 to ensure wide participation and engagement across zones.
Although NASAA and its constituent state securities regulators are known for their regulatory and examination activities, it is important to note that NASAA provides valuable resources for state-registered investment advisers to enhance both compliance and operations efficiency and effectiveness. These Groups and the periodic outreach programs give state RIAs access to invaluable resources for strengthening compliance practices and enhancing operations.
Please see the resources page on our website for more information from NASAA.
