Defusing the Year 2000 Time Bomb: Considerations for Investment Advisers

Kelvin, Jeffrey B.
June 1998
Journal of Financial Planning;Jun98, Vol. 11 Issue 3, p22
Academic Journal
This article offers advice to financial planners in addressing challenges to be presented by the year 2000 (Y2K), as of June 1998. The starting point is an internal assessment of existing infrastructure. A planner cannot assume there is no Y2K problem. An active assessment must be undertaken. This is more than good business planning. The planner must next evaluate the obligations of various software vendors. Write to all vendors and request a representation from each one that their products are Y2K compliant. Look at the supply chain to see if there are any Y2K problems along the line. The planner must appreciate the fact that not only must he or she be Y2K compliant, but anyone with whom the planner interacts also must be compliant. clients are going to begin to ask the planner if he or she is Y2K compliant. As the millennium gets closer, there will be increased publicity about the problem. If planners are not Y2K compliant, they must disclose this fact on the Schedule F of the Form ADV. Failure to do so will, in the apparent view of the U.S. Securities and Exchange Commission, constitute an anti-fraud violation of the Investment Advisers Act. All registered investment advisers should be maintaining 17 separate recordkeeping files internally so that upon audit, these may be produced for the audit team. The practitioner who is not a federally covered adviser, but rather is only registered at the state level, should not conclude that this Y2K compliance responsibility does not apply. Finally, the practitioner should check with his or her professional liability carrier to discuss the risk management implications stemming from the Y2K problem.


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