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How to prepare clients for changes to their BDC and nontraded REIT investments

April 26, 2016

Advisers need to communicate that while upcoming account statements may look a bit different than before, the alternative investments in clients’ portfolios remain fundamentally unaffected

Apr 20, 2016 @ 12:01 am | By Clive Slovin | Investment News

While the Department of Labor’s newly unveiled fiduciary rule has dominated industry headlines in recent months, another fresh regulatory shift also has the potential to cause significant upheaval for countless advisers.

The Financial Industry Regulatory Authority Inc.’s Regulatory Notice 15-02 announced changes to NASD Rule 2340 and Finra Rule 2310. As a result of these changes, effective April 11, retail clients invested in direct participation programs — such as publicly registered business development companies and nontraded real estate investment trusts — will begin to see critical adjustments to their account statements this quarter.

These adjustments ostensibly will offer a greater level of pricing transparency and better reflect the fact that the fees for these investments typically are paid upfront. The planned changes have been in the works for well over a year.

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Loreen M. Gilbert, CIMA, AIF, CRC, CLTC – President, WealthWise Financial Services
Blue Vault
July 6, 2016

Our firm has been using Blue Vault from the first year it was available.

We have found it to be a valuable tool to verify what wholesalers tell us and to dig deep into how the reported investments are really performing.

We appreciate that Blue Vault has expanded its services from initially covering REIT's to now also including BDC's.

Our clients also appreciate that we conduct this additional due diligence on their behalf.