Skip to content

How Compliance Can Build a Sustainable Partnership with the Business

Innovation in financial services brings its own unique challenges for compliance, notably, how to support these efforts while vigilantly complying with regulations. Having navigated these circumstances at leading global firms like RBC and Barclays, our Compliance Strategy Principal, Iain Duke-Richardet, sat down with me recently to discuss how compliance can build a sustainable partnership with the business.

William: Iain, there’s a common perception that compliance is inherently at odds with the business or growth strategies in technology issues. What do you think lies behind that?

Iain: Will, I think that’s a great question. In truth, Compliance did earn this reputation through a generation of compliance officers who said no to any ask, even the most reasonable ones. Compliance doesn’t necessarily trust easily; it wants to see and touch and confirm that controls do in fact operate as designed, and therefore the organization is not facing supplemental risk. Change can therefore be challenging because it demands an assessment of those controls, and even an adjustment without always necessarily knowing the precise outcome. It requires some degree of flexibility in a field that is all about inflexible rules and regulations.

More recently, though, and certainly in my own experience, compliance functions are increasingly interested in technology and innovation. In fact, in some circumstances, compliance may actually be driving that conversation. The response to both growth and technology has pivoted from a reflexive no to, at the very least, a ‘let’s discuss it.’

William: Quite the evolution. In your experience, when have you seen the partnership between Compliance and the business work best?

Iain: This is going to seem fairly straight forward, but the partnership between Compliance and the business is one that calls for both groups to understand each other’s priorities. Too often, the partnership doesn’t work because Compliance is not willing to consider the business’ needs or the business is coming to Compliance with too broad an ask. The business wants to sell or develop widgets or provide the service, and compliance is focused on the controls that minimize any risk to the organization. So the partnership really works best when compliance has an opportunity to assess the business’ outcome and the business tailors outcomes to align with any limitations that already exist. If the business objective is designed with absolutely no controls, they’re unlikely to receive a great deal of support from the compliance function.

William: So putting it into practice today, what are some initial steps or next steps that firms could take towards building this cohesive partnership between Compliance and the business?

Iain: I think a lot of the progressive organizations have taken a couple of steps in terms of building this partnership. One of those is to bring a compliance partner into the early stages of a business project, sometimes even as early as the actual ideation. Given that opportunity, a compliance partner can flag early in the exercise any kind of risk or hurdles that may lurk, which then means that those can be addressed throughout the planning, development, and execution. So rather than the business coming with everything prepared, having put a lot of work into an exercise, with compliance seeing it for the first time right before launch, the groups are actually aligned and both have skin in the game to see it succeed. As part of this process, I think it’s always helpful when business and compliance come together to learn about the technologies that underlie the desired outcomes; again, they’re working together.

The other step that I’ve seen organizations take is cross functional training and education. So if the Compliance team understands and has a little bit more exposure to the business, as well as the business stakeholders having more exposure and understanding of the compliance framework, the impact is that the functions can actually appreciate each other’s objectives and work towards them and within them as opposed to coming at each other focused only on their own side of things.

In Summary:

  • To strike a balance between innovation and compliance, it’s critical to insert Compliance directly into the ideation or strategy phase.
  • Too often teams put ideas in front of business leaders without vetting with Compliance first, which inevitably leads to challenges down the road with compliance.
  • As new ideas, technologies, and campaigns are ideated, firms should naturally confer and align with Compliance before presenting to the business. One way to systematically ensure this happens is to instill dedicated partners cross-functionally, for instance nominating a compliance technology partner.

The Last Mile of Insurance: Keynote at InsureTech Connect 2020 #ITC

In the last five years, InsureTech Connect (or ITC, as it’s commonly known), has rapidly grown into the largest gathering of insurance innovators. Last year, our team joined the event in person with over 7,000 attendees in Las Vegas, and launched the Hearsay-Guidewire Connector. This year, of course, the event has gone virtual and we are so excited that our founder and Executive Chair Clara Shih is being featured in the keynote fireside chat with Guardian Life CEO Andrew McMahon.

Most insurance companies had focused most of their digital investments on automation and self-service, and in the pandemic, we’ve seen how the time has come to equally leverage digital to rearchitect how the field works and to strengthen rather than replace human connection. Using Hearsay as the front-end between agents and customers, companies are redistributing marketing and servicing work to corporate teams to allow reps to focus on value-added selling and relationship activities.

InsureTech Connect CEO and co-founder Jay Weintraub moderated a powerful, exciting conversation between Andrew and Clara. Here are some of the key insights and takeaways:

  1. Guardian Life has been in existence since 1860. They are celebrating 160 years this year. Covid is not the first global crisis Guardian has had to navigate. They’ve been able to apply lessons learned from previous pandemics including the 1918 Spanish flu and world wars to navigating the uncertainties of this year and maintain the long view of what needs to be done.
  2. Technology is disrupting every aspect of the insurance value chain from product and underwriting to marketing, distribution, and claims. As an insurance executive, it can feel daunting and hard to know where to start. But one area matters most: what customers experience. The most effective digital transformations start with the customer. Not what the carrier ideally hopes the customer will experience, but what the customer actually experiences– the last mile. Not customer surveys, but actually solving customer needs when and how they want. Start there, and the priorities will become clear.
  3. So-called personalization today doesn’t feel very personal. Has anyone ever gotten an automated email and thought to themselves how special it is and that it was uniquely made for them? Relationship advisors play a very important role. Life insurance is still very much sold, not bought, the vast majority of the time.
  4. Combining the authentic human relationship with a trusted expert with digital scale will allow advisors to maintain ongoing touch points with customers– which is increasingly important both for retention and cross-sell and also for regulatory reasons, such as RegBI. In the past, there were too many insurance customers who never heard from their agent again after the initial transaction.
  5. There is a role for direct-to-consumer and also intermediated channels. Today, most carriers approach each channel in a siloed manner. A unified last-mile engagement layer will allow carriers to blend digital, contact center, and field channels in a frictionless way for customers.

For centuries, the insurance category has played a critical role in helping businesses and families survive the hardest of times. In the past seven months, we’ve seen unprecedented human connection take place on our platforms between agents and advisors and their customers– and all signs point to this authentic digital engagement sustaining well beyond the pandemic. Thanks to Jay and ITC for featuring Hearsay this year, and thank you to Andrew and Guardian Life for being one of our boldest, most forward-thinking customers!

Clara Shih on The Big Reveal, with Suzanne Siracuse

We were excited to hear about Suzanne Siracuse’s new podcast, The Big Reveal, which aims to bring personal interviews with wealth management industry innovators and leaders to life. Suzanne, founder and former longtime CEO and Publisher of InvestmentNews, is herself an influential leader in the wealth management industry, and we were thrilled when she invited Hearsay founder Clara Shih to be her launch guest speaker along with Michael Kitces, George Nichols, and Bill Crager.

Here’s a link to Clara’s recent conversation with Suzanne, with a few excerpts highlighted below:

Suzanne: Clara, we met four years ago when I interviewed you at the InvestmentNews Women Advisor Summit.  I have to admit I was in awe of your background… You graduated from Stanford with undergraduate and Master’s degrees in computer science. You were an early employee at Google, then joined Salesforce.com. In 2007, you saw the rising tide of social media and became famous for creating the first business application on Facebook, known as “Faceforce.” Then you founded Hearsay Social, now Hearsay Systems, where you served as CEO for 11 years until one month ago. With all those successes, I found you to be warm, generous, and personable, and you were a huge hit with the many advisors who attended that summit.

Clara: Thank you, Suzanne. My family came to this country in the 1980s with not very much, and I’m so grateful for the many opportunities I’ve had. In my life, I have always tried to dream big and take risks. Some have worked out well. I’m thankful to have met inspiring partners and leaders like you along the way!

Suzanne: So let’s talk about your recent announcement.  You recently moved into the role of Executive Chair and promoted your COO Mike Boese to CEO.  Whenever a high profile leader leaves the top spot, there’s always speculation on why. Can you take us through this decision and why now?

Clara: After 11 years, it was time. I know you know, having been the founder of InvestmentNews, and those of you watching who have built your own business know that being the founding CEO takes everything you have– every day, every hour, every weekend, every ounce of your being.

Last December I let the board know I needed to start thinking about a longer-term transition. In Q1, I met Mike, and here was someone who has started companies and scaled companies to hundreds of million in revenue and loved our mission and culture, then COVID happened and I realized the transition could happen much sooner.

Suzanne: Do you think the pandemic accelerated your timeline?

Clara: There is no question. During crises, we see what leaders are made of. Mike rose to the occasion and truly impressed me and the entire board of directors with his compassionate leadership, incredible work ethic, and commitment to our customers. On a personal level, the pandemic for me, like many people, has been a time of reflection and soul-searching. Over the summer, I realized the time had come after 11 years for me to take a break, spend time with my family, and try something new, with the peace of mind that Hearsay would be in great hands.

Suzanne: Over the summer, before you announced your new role, you and Mike co-led a major deal with Salesforce in which they took an equity share in Hearsay.  This deal showcased an important strategic alignment between Hearsay and Salesforce marrying Salesforce’s CRM and Hearsay’s social and digital engagement capabilities. It was big news in our industry.  Tell me how that all came together.

Clara: Our partnership has been driven by market forces – compliant digital engagement and CRM need to come together in service of the customer. Customers of both companies kept asking us to work more closely together on integrations, customers like Fidelity, Prudential, Morgan Stanley. So it was really just formalizing what was already happening naturally in the market to better serve what advisors need.

The amazing thing is there are now multiple phases of digital transformation which have been made possible thanks to this partnership. It’s not just about digital marketing. It’s completely rearchitecting how advisors spend their time and leverage analytics in every part of running their practice. The implications are tremendous, more than many people realize.

Phase 1. Contact and data sync

Phase 2. Workflow

Phase 3. Routing

Phase 4. Automation

Suzanne: While both Salesforce and Hearsay are giants in serving large brokerage firms and independent broker dealers, you have not made as much traction in the RIA space, though you do count Marty Bicknell and Mariner as a client. Are RIAs an area you are looking to expand into?

Clara: There’s no question we need to serve RIAs. They are a critical and growing segment in wealth management, and it’s a matter of when, not if. That said, I’m a big believer in focus, and timing and sequencing expansion– this is why Hearsay doesn’t sell technology to life sciences or tech companies. We have always been laser-focused on wealth management and financial services firms with relationship managers. When it comes to RIAs, we have a lot of learning to do. I’d like to learn from as many people as I can. Thinking about new markets and segments such as RIAs and international geos is one key area I’ll be focused on as Executive Chair.

Suzanne: Social media, which was the primary area Hearsay specialized in when you started the company in 2009, has become “not a nice to have” way to communicate but almost an essential way to communicate.  You were ahead of your time!  What gave you the idea to create Hearsay and the category of social selling in the first place?

Clara: Back in 2009, Facebook and LinkedIn had just launched and usage was growing at an exponential rate. A friend of mine was just starting out as an advisor, had no clients, and was just cold calling. I couldn’t believe how inefficient and ineffective it was. It dawned on me that every step of the sales relationship cycle, was going to get totally transformed by social and digital forces and that a solution was needed to bring business focus to social media. We started with social signals – money-in-motion life events being shared on social networks (the “hear” part of Hearsay), as well as social drip campaigns and 1-1 messages (the “say” part of Hearsay), and of course all of the compliance elements which are table stakes in wealth management.

Suzanne: Since then, Hearsay has made some big moves into adjacent client engagement areas, such as your compliant text messaging solution and new Hearsay Actions platform. How have you seen digital help advisors with their business development and client engagement efforts?

Clara: In every industry, technology is completely transforming how we need to work. In wealth management, this manifests as advisors focusing more of their time on value-added relationship acquisition and deepening activities. On the surface, Hearsay appears to be compliant text messaging and social selling. In reality, what Hearsay really is, is a way to automate and route marketing demand generation and client servicing tasks.

Suzanne: How has COVID changed the way Hearsay is working with clients and how advisors use Hearsay?

Clara: We’ve seen unprecedented usage of our platform since March. It’s been very uplifting to see how advisors have stepped up like never before to be there for clients when it really counts. From Hearsay’s perspective, the shift to remote work has been very seamless given we were already set-up with zoom, texting, social, and digital engagement tools pre-pandemic. With everyone stuck at home, we’ve tried to get creative in finding ways for human connection despite not being able to meet face-to-face, such as sending a supply box to everyone ahead of our largest-ever customer summit in May, or more recent virtual dinners where we have the same meal and bottle of wine delivered to a client as what we’re having so that we can still break bread together and have a slower conversation outside the hustle and bustle of back-to-back meetings.

Congratulations to Suzanne for the launch of her new podcast, and thank you for featuring Clara and Hearsay!

Regulatory Scrutiny of Client Engagement is Here – Are You Ready?

In light of a recent SEC penalty, now is not the time to rely purely on policy.

As part of my role with Hearsay, I am frequently asked for compelling Compliance-grounded reasons why customers might contract our products and services. In the past, a recitation of the relevant rule and laws, in conjunction with reference to regulatory smite, was sufficient to sway any customer. Recently, however, the underlying motives behind this conversation seem to have shifted. It seems the relative cost of a compliant product and service – usually measured by the license fee, without consideration to the benefit of the product and service – is being weighed against the likelihood, or severity, of regulatory censure. This is a worrying development. Since regulatory frameworks typically don’t prescribe how firms comply with the obligations, some have increasingly shifted responsibility to the employee, adopting a policy prohibiting certain activity, but not actually monitoring results that regulators have become more adept at testing for.

This approach may reflect the softening of regulatory censure for non-compliant communication in the email, texting and social media messaging channels, with penalties decreasing in size and frequency. Over-indexing on this trend, however, strikes me as concerning. In just a few short months, brokers and advisors went from meeting a friend for lunch at a restaurant or attending an event, to maintaining those relationships digitally from their home. In order to adjust to the world of social distancing, market participants have had to rethink their engagement model to adapt to new realities. The uptick in the use of social media and text messaging is significant, Hearsay observed a 300% spike in digital communications since the onset of the global pandemic.

The adaptations of market participants – as well as ill-intentioned individuals – has not gone unnoticed to regulators who have issued myriad alerts, FAQs and guidance to protect investors and remind organizations of their obligations. This can be viewed as both a warning and an opportunity. To prepare for what I believe to be a more stringent environment around texting, firms should be looking at the controls they have for their social media and electronic communications programs, assessing whether the channels being used by their employees are permitted, being used effectively, and are compliant with their organizations’ regulatory obligations. It’s only a matter of time before regulatory sweeps start focusing on remote electronic communications.

For those firms that already permit, with controls, engagement on social media and through text messaging, now is the time to assess whether their programs and controls remain effective and adequately address regulatory obligations as well as pandemic related adjustments. Those that are relying on a policy to prohibit control must assess whether the policy is sufficient and to extensively test – remediating and sanctioning where necessary – the effectiveness of the prohibition. Case in point –  just recently the SEC levied a $100,000 penalty for over-reliance on policy and non-technical controls, such as attestations. This is indicative that such an approach can leave firms with a false sense of security regarding their texting program.

Regulatory scrutiny of such programs is already in progress and examiners have extensive tooling and a broad set of lenses by which to evaluate compliance (i.e., approved users/channels; content quality; required pre-approvals; extent & adequacy of post-review processes; accuracy & completeness of records made and retained). Given the rapid growth in the use of these channels, it does not seem unreasonable to expect a resurgence in the frequency and, for the most egregious cases, the size of penalties imposed by regulatory agencies in the ensuing months and years. As such, now does not strike me as the time to rely solely on a policy prohibiting certain activity, nor to ask whether implementing technical controls would be deemed a reasonable approach. Now is the time to ensure you have the appropriate solutions, processes, and expertise in place to confidently empower your field in a time when digital client engagement is table stakes.

Career Tips for Difficult Times: Founders’ Perspectives

The Wall Street Journal held a virtual Jobs Summit recently where Clara Shih, Founder & Executive Chairwoman of Hearsay was interviewed alongside Kenneth Lin, Founder & CEO of CreditKarma. Michelle Ma, WSJ Assistant Editor, Live Journalism, dug into what they learned from the 2008 recession, which was the time period both Shih and Lin founded companies.

Over ten years later, here we are again. As CEOs who have weathered difficult times and hired their fair share of candidates over the years, they had some excellent advice for those who find themselves unemployed, like so many Americans today.

If you missed the live event, here are the highlights.

Every job teaches a skill

Lin suggested that every job can build your skillset. He shared that he once had a job as a dialer for stockbrokers. This involved a stack of index cards with names and phone numbers on them and dialing all day with the goal of getting those people on the phone. Though it may have seemed like a trivial role, he learned how to be more confident on the phone; a valuable skill.

The lesson? Even a job you may not be excited about is teaching you something. If you end up taking a position that’s not perfect to put food on the table, look for what you can learn and make the most of the job you have. Then when you interview for your next role, present what you learned.

Hustle and other top skills in demand, today and beyond

Everyone knows times are tough and what was relatively easy 6 months ago takes real work in today’s virtual, budget-conscious world. That’s why when Clara’s hiring these days she’s looking for someone with hustle, which she defines as someone who knows how to get creative, get things done, and take risks. Number two for Shih is empathy/EQ and knowing how to connect with people in a remote setting.

Lin shared that passion is one of his key criteria. When times are tough, what pulls people through is when they love what they do. He said he knows sometimes it’ll just be a paycheck, but if you have a choice, pick the job you love.

In terms of skills based on experience (hard skills), Shih suggested that the ability to connect with customers, writing code/engineering, and being able to write (content, copywriting, etc.) are always in demand.

Mine LinkedIn for Hidden Career Advice

Have you been using LinkedIn to re-establish dormant connections and see how the people you admire got where they are? If not, it’s time to get your LinkedIn hustle on.

When Ma mentioned that Clara has said LinkedIn is a blessing for job-seekers, Clara enthusiastically talked about the ability to look at the career paths of people you admire and see how they’ve gotten to where you want to be—what did they study, what certifications do they have, what kind of experience do they have? Take this opportunity to map the next steps you want to take in your career. Then invest in yourself and get the skills you need to take the next steps.

Valuable advice from a mentor

Randy Komisar, a prominent Silicon Valley attorney, executive, and author was a professor of Shih’s at Stanford. Like many college seniors, she wasn’t sure what she wanted to do once she graduated. When she asked him how to think about her career, he told her that if she wanted a big career in tech, she needed to build up generally valuable skill sets, including these three things:

Ship a new product end-to-end: conception, design, prototype, iteration, shipping, launch, continuous lifecycle
Customer experience skills (sales, account management, etc.)
Learn how to manage people

Resume vs. referral: what’s more powerful?

Someone in the audience asked how many people are hired based solely on a resume versus a referral. Shih and Lin agreed here; referrals are preferable. Shih pointed out that this speaks to the importance of networks (another point in favor of re-connecting if it’s been a while!), while Lin mentioned that referrals have higher close rates. Shih also noted, however, that a referral only gets someone in the door; they still have to earn the job. Both do extensive reference checks and interviewees speak with multiple people within the company before being offered a position.

Keep going!

This has been a hard year and there are lots of smart people out there looking for their next role. Aside from the excellent advice they shared for job seekers, Shih and Lin also shared the truth behind start-up life, which can serve as excellent inspiration to keep going through the tough times. A start up founder and CEO, during a recession or not, gets knocked down over and over again. CreditKarma almost ran out of money three times; Shih cleaned the office along with her CEO/product manager/designer/you name it duties. For 99% of start-ups, it can take years of grit and determination before making it. The big secret? Just keep going!

We currently have a number of open positions at Hearsay, so take a look at the Careers page and let us know if there’s a match.