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Regulation and Compliance > Federal Regulation

The 3 Top Issues at Industry Events Now

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As financial services conferences have returned to in-person, the critical role they play has become more apparent. What we have missed over the past couple of years is how pivotal they have been in facilitating discussions in real-time while helping industry professionals keep a pulse on the first-hand challenges both financial companies and their advisors face. 

 During the first half of 2022, myself and several of my colleagues had the opportunity to attend or speak at several events, including FINRA’s annual conference, SIFMA Private Client, SIFMA Compliance & Legal (C&L), and the Association for Life Insurance Council (ALIC). 

While compliance and regulatory themes dominated many of the live discussions, there were several important takeaways that stood out. 

1. Trust has fundamentally changed; earning it is more important than ever.

The pandemic shifted the way many financial services firms traditionally conducted business, as it dampened their ability to build and nurture their client base in person. They were further challenged when a tremendous number of new market entrants came to life, enabling investors to make risky and complex investments without much knowledge of what they were investing in. 

This paradigm shift has challenged a trust-based industry, which must now grapple with ways to cultivate new — and advance existing — relationships, placing trust back at the center.

2. Having an online presence is now table stakes for finserv professionals.

Increasingly, the industry is turning towards electronic channels to build these critical relationships. 

Social media is a big one, but text messaging, and next-gen websites are important as well. An online presence is vital for reaching new audiences and establishing trust with them. In fact, 87% of investors will visit the social media page of a financial professional prior to deciding whether to work with them. 

Personally, I did this after first visiting BrokerCheck. It is clear that having an on-brand and authentic online and social media presence is a prerequisite for our post-pandemic world.

 3. More than ever, regulators are on high alert.

The recent conferences highlighted that unsupervised electronic communications — in whatever form — is top of mind for compliance professionals. Not surprisingly, this shift to electronic channels has also caught the attention of financial services regulators. 

At the beginning of the year, each regulatory priorities letter included some reference to unsupervised communications. As evidence of this, regulators have expanded their examinations with respect to unsupervised communications, and investigations are ongoing and expanding. 

All of this is happening under the specter of increasingly larger and more frequent enforcement actions by regulators. 

The pressure on compliance will only continue to increase from organizations’ business side to open up their social programs. But the fear of regulatory action is creating pause as teams seek solutions to mitigate this very real risk. In many cases, this pause can leave money on the table while this glut of new entrants develop relationships with other financial institutions.

At the SIFMA conferences, attendees sought to balance their desire to construct social selling programs through online relationship-building without provoking the ire of regulators. Meanwhile, at FINRA’s annual conference, the session on regulatory trends was standing room only, with attendees lining the walls. 

During that session, which was held on the morning of the announcement of a $1 billion fine, we heard some heated commentary from the panelists, which furthered the audience’s concerns. And at ALIC, it was clear that firms needed to leverage technology vendors to supervise this type of activity in a scalable way.  

Compliance will continue to be one of the biggest issues financial firms and representatives face. They want to do the right things – for their business and their customers — within a changing regulatory and compliance landscape. In such efforts, conferences play a key role in sharing best practices. 

Learning from one another, digital client communications can improve, thus nurturing trust and strengthening relationships, while staying on the right side of regulations. 

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A 15-year compliance veteran in financial services, Bill Simpson is the Compliance Principal at Hearsay Systems.

(Image: Adobe Stock)