The Renewal Reset Series: From Filing to Findings — Using Renewal Season to Complete a Meaningful Annual Compliance Review | Part 3 of 3
- Corrie Scoby
- 1 day ago
- 5 min read
You’re now reading the final article in the Renewal Reset Series, which explores how advisers can use renewal season as an opportunity to strengthen their compliance programs.
In this series so far, we've explored:
This final article explains how to transform the work already done during renewal season into a risk-based annual compliance review, creating a practical framework that helps advisers close the loop on their annual compliance obligations.
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Why Annual Compliance Reviews Are Often Misunderstood
Annual compliance reviews are among the most misunderstood obligations for registered investment advisers.
Regulators do not prescribe a specific format, but Rule 206(4)‑7 and subsequent SEC risk alerts make clear that advisers must conduct a thorough, risk‑based evaluation of the adequacy and effectiveness of their compliance program, taking into account how the firm actually operates[1].
Done well, an annual review provides far more than a check-the-box summary. It documents how the firm:
Identifies compliance risks
Assesses whether existing controls address those risks
Implements corrective actions when gaps are identified
Renewal season provides an ideal starting point for this work because the same information used to update filings can also serve as inputs for a meaningful annual review.
Renewal as a Risk‑Identification Tool
Annual registration renewal requires firms to revisit critical aspects of their business, including:
Services offered
Client types
Fee arrangements
Custody and discretionary authority
Conflicts of interest
Third-party service providers
Each of these areas carries inherent compliance risk. When advisers review renewal disclosures alongside updated policies and procedures, they are already performing much of the analysis required for a defensible annual review.
SEC staff have explained that annual reviews should consider:
Compliance matters that arose during the previous year
Changes in business activities
Regulatory developments affecting the firm[1]
Rather than starting from a blank page, firms can use renewal data to identify where risks exist and whether current controls adequately address them.
Regulators have noted that many advisers fail to take this step. A 2017 risk alert found that some compliance manuals were not tailored to the adviser’s business, were outdated, or were not followed in practice. Examiners also observed that annual reviews were either not performed or did not address the adequacy of policies and procedures, leaving identified problems unresolved[2].
Using renewal season as a deliberate risk‑identification exercise helps advisers avoid these pitfalls by ensuring their documentation reflects current operations.
A Practical Framework for Conducting an RIA Annual Compliance Review
Advisers can turn renewal data into a meaningful annual compliance review by following a structured process.
Step 1: Gather Renewal Disclosures
Collect the information submitted in Form ADV and other registration filings, including details about:
Services offered
Fee arrangements
Client types
Custody arrangements
Vendor relationships
Disciplinary history
These disclosures provide a clear snapshot of how the firm represents its business to regulators and clients.
Step 2: Compare Disclosures to Written Procedures
Evaluate whether existing policies and procedures address each service and risk area described in the filings. Rule 206(4)-7 requires advisers to:
Adopt written compliance procedures reasonably designed to prevent violations
Review those procedures at least annually
Designate a chief compliance officer responsible for administering them.[3]
If policies omit or contradict current disclosures, the firm may need to update its procedures.
Step 3: Verify Practices Against Policies
Next, determine whether day-to-day practices match both disclosures and written procedures.
This may involve:
Interviewing personnel
Reviewing operational records
Testing compliance processes
During recent examinations, the SEC observed that some advisers did not follow their own compliance policies or relied on off-the-shelf manuals that were never implemented.[2]
When gaps exist between policies and practice, those discrepancies should be documented and addressed.
Step 4: Document Findings and Corrective Actions
For each issue identified during the review, firms should document:
The compliance risk identified
The corrective action required
A timeline for remediation
The SEC’s compliance program guidance emphasizes that policies should help firms prevent violations, detect violations that occur, and promptly correct any violations.[1]
Thorough documentation demonstrates that the firm has actively evaluated its risks and taken steps to mitigate them.
Step 5: Conduct Interim Reviews When Needed
Annual reviews should not be the only time firms assess their compliance programs.
If significant events occur—such as:
Launching a new product or service
Major staffing changes
Regulatory developments affecting the business
—firms should conduct targeted interim reviews rather than waiting for the next annual cycle.[1]
This proactive approach reflects regulators’ expectation that compliance is an ongoing process, not a once-a-year exercise.
Why This Matters During an Exam
Examiners are not looking for perfection. They are looking for evidence that a firm’s compliance program is:
Current
Consistent
Actively reviewed
When renewal filings, procedures and annual review documentation support one another, advisers can demonstrate that compliance is integrated into their operations rather than treated as an afterthought.
Conversely, a disjointed approach can invite scrutiny.
The 2019 SEC supervision risk alert reminds advisers that they are fiduciaries and must make full and fair disclosure of all material facts, updating Form ADV promptly whenever information becomes inaccurate.[4]. A well‑documented annual review shows how the firm fulfilled that obligation.
State securities regulators reinforce this expectation. NASAA’s 2021 Coordinated Investment Adviser Exams Report recommends that advisers:
Review and revise Form ADV annually
Maintain written compliance procedures that identify responsibilities
Maintain records demonstrating that procedures are followed.[5]
Aligning renewal filings, policies and the annual review helps firms satisfy these expectations and ensures documentation is exam-ready.
Turning Renewal Season Into a Strategic Compliance Reset
For many firms, the challenge is not understanding regulatory expectations but finding a practical way to meet those expectations without overwhelming limited resources. By aligning annual renewal filings, procedure reviews and the annual compliance review, advisers can transform a busy filing season into a strategic compliance reset.
The same information gathered for renewal can serve as the foundation for:
Updating policies and procedures
Identifying operational risks
Conducting a meaningful annual review
This approach saves time, strengthens documentation and reduces exam stress.
If your firm is preparing for renewal season or evaluating its annual compliance review process, this may be the right time to step back and assess whether your documentation truly reflects how the firm operates.
When disclosures, policies and review processes are aligned, firms are better positioned to demonstrate a compliance program that is thoughtful, current and defensible when regulators come calling.
The Renewal Reset Series ends here, but the discipline of aligning filings, procedures and reviews can carry firms through many renewal seasons to come.
Corrie Scoby
Chief Consultant & Owner, Three Lumos Consulting, LLC
We guide RIAs with clarity, integrity, and partnership—so you can spend less time on compliance and more time serving clients.
Note: This article provides general information and does not constitute advice. Consult your compliance team for guidance specific to your firm.
Sources
[1] SEC Final Rule Release — Compliance Programs of Investment Companies and Investment Advisers (Rule 206(4)‑7 Adopting Release)
[2] SEC Risk Alert — The Five Most Frequent Compliance Topics Identified in OCIE Examinations of Investment Advisers (2017)
[3] 17 CFR § 275.206(4)-7 — Compliance procedures and practices (eCFR)
[4] SEC Risk Alert — Observations from Examinations of Investment Advisers: Compliance, Supervision, and Disclosure of Conflicts of Interest (July 23, 2019)
[5] North American Securities Administrators Association (NASAA), 2021 Coordinated Investment Adviser Exams Report
