Performance Calculations at Your Fingertips – Don’t let the SEC Rule Scare You!

On August 25, 2016 the SEC announced amendments to several Investment Advisers Act rules. The SEC adopted the Amendments to require additional information from advisers that will allow investors and the SEC to better understand the risk profiles of individual advisers and the industry as a whole. (Read full release here).

While all of the Amendments are extremely important (read more here about the ones not mentioned in this article), there is one Amendment that I want to focus on. This is the Amendment to Rule 204-2 of the Advisers Act which covers the book and records rule. The change will require advisors to maintain additional books and records relating to the calculation and distribution of performance information.

In laymen’s terms upon release of the Amendment in October firms will be required to retain supporting records to any performance calculations presented to a client during a given time period. For wealth management firms, it is now a requirement to have a provider that:

  1. Doesn’t get rid of those calculations during a specific time period
  2. Has drill-downs into the analysis of the specific calculations used to provide performance

We, at First Rate, are excited about this regulation. Yes, you read that right, excited!

Why you might ask? Because our CORE solution provides numerous drill-downs for wealth management firms to provide evidence to their investors and the regulators quickly and easily. This allows wealth managers more time engaging with their clients and less time finding and deciphering data presented years ago.

For example, if you received a request from the SEC to provide evidence for how the returns were calculated for the MANILA portfolio (refer to account from screenshot) and for the time period of October 2015 (seen in screenshot), you would simply pull up that account and date, and drill down to see every element in the calculation explained.


Amidst the changing regulations that your firm is facing, First Rate is proactively addressing your needs with the information required to provide transparency into a quick and easy analysis. First Rate works continuously to provide the best solutions and services to help firms like yours. foster growth and empower investors.

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