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Had a biz audit a week or so ago.


*I asked him what situations created the most problems in the money management field? He said when folks in industry started to feel desperate was the most likely time you'd see malfeasance. I don't think this is unique to any particular business either.

*Had special interest in whether alts were being offered. I'm not sure why, but they wanted to know about non-traded REITs (which by and larger I personally think out to be outlawed), MLPs, etc.

*contracts have to include non-assignment clauses (so you don't sell the business to another person without getting client consent)

*he said there is a special emphasis on how elderly are treated; unrelated to my business, but he said the fraud in nursing homes is chronic; they are seeing cases of criminals infiltrating memory care facilities, identifying isolated clients and scamming their assets, completely with photo-shop changes to pictures in their room.

*special emphasis on cyber-crimes. There were some lurid tales here.

*there is increasing interest in how people in this business interact on the internet - concerns like pump and dump, etc.

*fwiw, stock pickers in small firms at least are mostly gone. Emphasis now is on funds, etfs, annuities (esp. annuities), as you would expect.

*he said that risk section of ADV tends to be a chronic issue - this should be descriptive and comprehensive of the risks in the business

As always, advise is to disclose, disclose, disclose. And then disclose some more.
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