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Compliance Trends in Advisor Communications – Summit 2019 Takeaways

May 15, 2019

I had the privilege of moderating a session on “Compliance Trends in Advisor Communications” at Hearsay Summit this year. The session was well attended by compliance officers from enterprise wealth management and insurance companies whose respective organizations have taken a careful, thoughtful and pragmatic approach to enable advisors to communicate with clients and prospects over multiple channels.

My goal for the session was to create a collaborative environment that offered the following:

  • A setting conducive to open sharing of thought leadership, idea generation and best practices across financial services firms specific to advisor communications capabilities.
  • Cross-fertilization of ideas and problem-solving for common and uncommon problems associated with electronic communications across multiple mediums.
  • Professional development that translates into actionable tasks that can be shared and implemented across each participant’s respective organization.
  • Education for participants on the “hot-issues” / roadblocks that may impede organizational readiness to comply with electronic communications requirements specific to advisor communications.

There is no Competitive Edge in Compliance

Throughout the session, one common theme continually emerged – “There is no competitive edge in compliance.” As compliance officers, we all benefit from sharing ideas and thought leadership with one another. As a result, we are able to create cohesive and consistent approaches to common problems shared across our respective organizations. Creating best practices together, for our industry as a whole, instills confidence on the part of our regulators. As we all know, regulators like standards; when firms approach compliance for the technology solutions we use to fulfill our compliance responsibilities in a common manner, we’re all better off.

The Use of Social Media – Is it Finally Socially Acceptable?

I was truly impressed with the proactive steps many of the participant organizations are taking with respect to enabling social media for advisors. This included a close collaboration with marketing departments and the creation of workflows that enabled efficient processes specific to creation and/or curation of marketing materials approved for advisor dissemination over social media. Many organizations were beyond “pilot” social media rollouts and had either fully implemented an enterprise approach and strategy for social media, or were well on their way.

From a pure compliance perspective, participants indicated their workloads had only increased incrementally due to the use of technology (in this case, Hearsay) to aid in the creation of the appropriate workflows and approval processes. As we all know, this can be a huge gating issue when organizations are contemplating the net effect of enabling new and different approaches to advisor communications. This is extremely encouraging since it’s coming straight from the compliance officers/people in the trenches actually using this technology on a day-to-day basis, not the vendor trying to sell their solution.

To Text or Not to Text – That is the Question!

Texting and the use of chat apps have become the preferred way to communicate in writing, especially among younger people. The financial services industry has struggled with texting, as most organizations have not embraced a mechanism to capture, retain and supervise business-related texts.

As an industry, we have historically taken a strict position against texting for business-related purposes and managed it only through policies, attestations and certifications. However, the data shows that texting and the use of chat apps are occurring and nearly impossible to control without the right infrastructure in place. As a career compliance officer, I have never believed that managing risk through policy alone is an optimal way to create an adequate control environment. It is incumbent upon organizations to trust but verify that advisors are adhering to the policies and procedures developed to protect investors, firms and the advisors themselves.

With the advent of new technologies to now help organizations meet their respective record retention and supervision requirements, the problem appears to be one that can now be solved.  Several of the organizations at the session were starting to dip their toes into texting capabilities, with some further along in their implementation than others. Based on the initial feedback received during our session, the compliance officers in the room indicated the workload associated with supervising texts was not material, though they were all early in their implementations.

Please Purchase This Technology – It Makes My Life Easier

As we were nearing the end of our session, we rounded out our conversation focused on strategic investments in technology and building the appropriate business case to support it. I have been purchasing technology on behalf of organizations for over two decades. One of the most important lessons that I’ve learned is that the purchase of technology will never be supported by management based on the fact that it may make the life of the compliance officer easier. A business case must be presented that clearly articulates and quantifies the business benefit – creating efficiencies, cutting costs, enabling redeployment of existing resources to do bigger and better things and ultimately, working smarter. When organizations throw up the “What is the ROI?” smoke screen, a compliance officer must be prepared to justify the investment.

Closing Thoughts

I left the Hearsay Summit truly impressed with the quality of the overall event, and the level of engagement of the individuals that participated in the session I led. As a huge proponent of leveraging technology to assist in the execution of compliance responsibilities,  it was exciting to be surrounded by so many “evangelists” that came ready to openly share their experiences and perspectives – good, bad or indifferent. From an industry perspective, it was truly encouraging to not only see this first-hand but to surround myself with professionals that approach their respective roles and responsibilities with a high degree of care and sophistication.

We work in an industry where, as compliance officers, it can feel like we have a target on our back. But at Summit there were so many cross-functional leaders who ‘got it.’ It was a treat to be in a room full of people focused on making advisors successful through digital communications – and understanding that compliance is a critical part of that. Everyone I met at the Hearsay Summit demonstrated a stance where they and their respective organizations are approaching this risk pro-actively, taking control of their situation in a compliant and commercial manner. Here’s looking forward to next year!

Mitch Avnet

Mitch Avnet is the CEO and Managing Partner at Compliance Risk Concepts. Mitch is responsible for business development, relationship management and overseeing the execution of all client driven / business focused Compliance related projects and strategic engagements.

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