If you provide a Bill Paying Service for your IA client, you may trigger the Custody Rule.

The SEC issued a risk alert on the Investment Adviser Custody Rule. The rule is designed to protect advisory clients from theft or misuse of their funds and securities. It is listed that bill paying services can trigger this rule:

  • Failure to recognize that they have custody, such as situations where the adviser serves as trustee, is authorized to write or sign checks for clients, or is authorized to make withdrawals from a client’s account as part of bill-paying services.

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