Compliance and supervision. They often get a bad rap, but without policies in place and people to enforce those policies, companies as well as individual advisors and agents risk exposing themselves to an enormous amount of liability, especially when it comes to communication: The recent fine imposed by the UK’s Federal Conduct Authority on an ex-Jefferies banker for illegal WhatsApp messages serves as a not-so-gentle reminder; here in the U.S., fines ordered by FINRA in 2016 increased 87 percent over 2015, with a 423 percent increase in fines for recordkeeping violations.
But simply banning advisors from communicating in certain ways isn’t the answer. The accelerated adoption of multiple digital channels by consumers – from social media to email to texting – makes it more important than ever for compliance teams to consider how their field can leverage them in a compliant way. And as the number of channels multiply, compliance teams also must figure out a way to manage the additional workload.
These were the main discussion points during our recent Hearsay Summit, where a select group of compliance execs gathered in San Francisco to share the latest insights and best practices. Led by Yasmin Zarabi, Hearsay’s vice president of legal and compliance, the salon session focused on two key areas:
Enabling AI to Scale Compliance
As it becomes clear that advisors must be able to engage on their clients’ terms in order to retain and grow their book of business, how can already-taxed compliance teams keep up and scale?
The group discussed how their firms are leveraging machine learning and artificial intelligence to enable their teams to work smarter, not harder. AI can help decrease the number of false positives, as it “learns” which flagged alerts are true violations that require interception by the compliance team. As more data flows through the system, the smarter and more accurate it becomes.
AI also can be used to prioritize which alerts are considered high risk or low risk, again based on the validity of historic alert data. When analyzing through long lists of alerts, it can surface the highest risk items to the top, so compliance and supervision teams can focus on those first and improve efficiency.
For more, see: “AI-Powered Compliance Controls and Risk Meter”
Texting: A New Frontier for Compliance
If there were to be only one takeaway from Hearsay Summit, it is that advisor-client texting is the new normal – and organizations that continue to adhere to a “no texting” policy are at a serious disadvantage when its comes to advisor productivity, recruitment and overall bottom line. What must compliance teams address when opening up this new channel?
Zarabi shared Hearsay’s four pillars of compliance framework, which also apply to texting:
The group also reviewed the Telephone Consumer Protection Act (TCPA), which includes regulations on how companies are allowed to communicate with consumers via text. Per the Act, a client or prospect must opt-in to receiving text messages. (With Hearsay Messages, this can be done via an initial automated text message sent via the mobile app, over email, and/or by syncing the advisor’s contacts with corporate “do not call”/”do not text” lists.)
For more, see: “Regulatory Scrutiny May Put Firms Without Advisor Texting Policies at Risk”
Overall, we had lots of thought-provoking discussion and input on the current state of compliance and where the discipline is moving. We look forward to getting the gang together again next year!
Watch Hearsay CEO and founder Clara Shih’s opening keynote, where she discusses the latest compliance trends and technologies:
- Recap of Hearsay Summit 2017: The Mobile Advisor Cloud
- Measuring ROI from Digital: How Does Your Company Stack Up?
- The New Mobile Imperative in Financial Services
- The Advisor Cloud Completes the Customer Experience
- Empowering the Field to Connect Authentically in the Digital Age
- #HSonAir Podcast: Highlights from 2017 Hearsay Summit – The Advisor Cloud Conversation
- The Future of Social Media: Video, Paid Content and 1-to-1 Messaging
- Hearsay Summit 2017: All keynote and panel videos
- #HearsaySummit coverage on Twitter