Is that a personal call? Eh, whatever.

Under former chair Gary Gensler, the Securities and Exchange Commission zeroed in on rooting out off-channel communications and improper record storage. But with a new administration in charge, a major Wall Street trade group is urging the agency to rethink rules it calls “burdensome, costly and unnecessary.” During the Biden years, the SEC reached nearly 100 settlements for record-storage violations, totaling over $2.2 billion in penalties, according to the Securities Industry and Financial Markets Association.

SIFMA asked the SEC last week to modernize and narrow its Communications Rules, arguing the current framework is too broad and outdated as technology evolves. “Communication has substantially moved away from paper toward e-mail, text messaging, message boards, social media and other electronic platforms,” SIFMA wrote in a letter to SEC Chair Paul Atkins.

With the current SEC already taking a much more business-friendly approach than it did during the last presidential administration, potential changes could provide advisors with a little more leniency in how they communicate with clients.

Just Chill

SIFMA — which represents asset managers, banks and brokerages — said the broad interpretation of the rule has created excessive compliance burdens without improving investor protection. The group proposed several reforms, such as:

• Excluding trivial exchanges such as emojis, “I’m running late” messages or other immaterial correspondence.
• Omitting items like AI-generated meeting transcripts that SIFMA says aren’t true communications.
• Standardizing a three-year retention period for all client communications, instead of the current three years for broker-dealers and five for investment advisors.

“Regulators are focused on protecting both clients and advisors, but sometimes non-sensitive communication via text should not be a fineable offense,” said Tom Balcom, founder of 1650 Wealth Management. “With clients expecting 24/7 access to their advisors, they often feel that texting is acceptable even after we have stressed to them that off-channel communications are frowned upon.”

Way Ahead of You. Cracking down on off-channel communications was a hallmark of Gensler’s SEC, alongside heightened crypto oversight and ESG disclosure efforts. Last August, the agency fined 26 broker-dealers and RIAs a combined $392 million for “long-standing failures” to maintain proper electronic records. In a final push this January, it charged a dozen firms — including Charles Schwab and Blackstone — $63 million over client conversations held on personal devices or apps.

However, as of this summer, SEC enforcement claims were down nearly 50%, with the majority of the cases dealing with clear-cut investor fraud as opposed to communications and record storage. So it seems like SIFMA may already have a friend in Atkins.

It’s hard to be empty-nesters when the chicks keep coming back.

As clients age, their financial priorities often shift toward preserving assets so they can retire comfortably, but many are simultaneously supporting adult children from their early-20s to mid-30s whose wages aren’t keeping up with their living expenses. Post-college kids are withdrawing roughly $500 a month from the “Bank of Mom and Dad,” according to more than half of parents who responded to a TopResume survey. About 30 percent of parents report spending $1,000 a month or more, and in some instances, the expenses continue for years, potentially draining savings and derailing financial plans.

“I’ve seen everything from the family phone plan that never dies to parents paying for housing, student loans or even vacations,” said Patrick Huey, owner of Victory Independent Planning. “Some have delayed retirement, taken on part-time work or cut back on their own spending or savings.”

Cat’s in the Cradle

While there is a growing “trad son” trend (SNL’s Colin Jost can tell you all about that), many young adults are grappling with high rent, steep loan payments and low starting salaries, Huey said.

Parents often want to help, but those who do risk not only draining their savings but also leaving their children dependent, said Priscilla Birt, lead financial planner at Donaldson Capital Management. “A child who’s never had to budget or contribute financially may not grasp the value of what they’ve been given,” she told Advisor Upside.

The survey also found:

• More than a third of parents spend 11% to 20% of their monthly household income on supporting their children’s job searches, including career coaching, resume writing services and networking events.
• Some 35% of parents also cover expenses like clothing and streaming subscriptions, while about a quarter give their adult children a monthly allowance.
• One in four parents say these costs have cut into their own finances and delayed retirement.

Cut the Cord. One of the best ways to reach clients who might have an unhealthy financial relationship with their adult children is to show them how much earlier they could retire if they stopped supporting them, said Chris Diodato, founder of Wellth Financial Planning. “That really resonates with people because if they think they have 30 years left, they don’t want to give away a third of that or keep working,” he told Advisor Upside.

Financial anxieties run both ways, too. Many retirees hoard money for their children, even if they’re well-off and independent. “I see clients deliberately take a hit to their own lifestyle to preserve that money,” Diodato said. “They think, ‘Even though I’ve saved $1 million to retire, what if something happens to my kid?’”

For clients who do want to help, specificity matters. Explicitly paying a phone or insurance bill typically results in clients spending less on their kids, Diodato said. “If a parent sends their child a check, that money always ends up disappearing, and they’re going to want more.”

Sometimes one deal just doesn’t cut it.

Sub-acquisitions made up nearly a third of all transactions this year, more than twice the amount in 2020, according to the latest DeVoe & Company report. Experts said the rise of sub-acquisitions, which occur when a newly acquired firm begins pursuing acquisitions of its own, are being fueled in large part by the rise of private equity investing. PE-backed RIAs make up just 3.7% of firms but control 25% of industry assets and are more likely to sub-acquire. As deals hit record highs, the trend could have impacts for both firms and for their subsidiaries.

“A lot of sub-acquisition strategies are what’s driving that difference,” said Michael Mangan, CEO of AdvizorPro. “It’s not just new RIAs being backed by PEs. It’s the ones that are being rolled up … falling under an existing platform.”

Putting the ‘Acquire’ In ‘Sub-Acquire’

One reason behind the rise is acquirers like Focus Financial Partners, which began consolidating its subsidiaries following a private equity investment and whose partner hubs make up the bulk of its business. Three Focus hubs alone — Colony Group, Kovitz and Buckingham — were responsible for 41 sub-acquisitions, per the DeVoe data. Carson Group, another serial acquirer, began as a minority investor in firms that were new to the industry and wanted to sub-acquire, said SVP of M&A Michael Belluomini. Around 2021, however, the firm began engaging in more equity swaps, where Carson takes, for example, a 25% stake in an RIA in exchange for a piece of Carson’s upside. “Rather than put all their chips on themselves, [advisors] wanted to diversify their holdings,” Belluomini said. “It was about making a bet that the mothership … was going to grow faster than their individual firms.”

And things show no signs of slowing. According to DeVoe:

• 75 sub-acquisitions have occurred year to date, matching 2024’s full-year record with a quarter of the year left.
• Firms backed by Wealth Partners Capital Group, which stakes acquisitive RIAs, were responsible for 31 sub-acquisitions this year.

Minority Report. Minority deals, meanwhile, accounted for 14% of all transactions this year — up from just 8% in 2023. It’s a misconception, however, that buyers offering minority structures are interested in getting involved operationally, said Allen Darby, CEO of Alaris Acquisitions. “They’re financiers, not partners,” he said. “Their play is to fund growth, ride the upside, and cash out in the next recap or portfolio sale.”

Then there are demographics: Advisors nearing retirement age, who make up nearly 40% of the industry, might take on a minority investment to double or triple their assets by the time they exit. The main motivation for many, though, remains a desire for some degree of independence, said Stephen Caruso, associate director of wealth management at Cerulli.

“[RIAs] don’t want to be entirely acquired and absorbed into a new entity,” Caruso said. “What minority investing platforms offer is the ability to tap into not only a capital flow or access to funding, but also a supportive investor.”