Navigating Compliance Challenges: Your Trusted Ally in the Financial Advisory World

Jun 17, 2021 5 min read

Hi, I’m Marlo, the General Counsel and Chief Risk Officer at Advisor Solutions. I’m excited to introduce a new blog series that focuses on the intersection between product and compliance. Welcome to my first article!

I’ve spent my career in the wealth and capital markets space developing, implementing, and advising on solutions to streamline legal practices. Our goal as a legal, compliance, and risk team at Advisor Solutions is to be ahead of the curve and to continually innovate — so that you, as a financial advisor or portfolio manager, can do just the same!

Compliance and risk professionals have your back — even when it feels like they don’t!

As the pace of regulatory change increases at an exponential rate, and there is an increased call for greater financial transparency, financial professionals find themselves at a crossroads. Most financial professionals warrant the title of professional — they eat, sleep, and breathe the world of finance, all in the best interest of the client. But even the good ones are finding it hard to keep abreast of the ever-changing requirements — from increased data collection and refreshing of that information to controls required to protect and delete that information when it is no longer required. From the expansion of the concept of what a conflict of interest can look like to the increase in specific disclosure and reporting around those activities, it is no wonder that even the good ones might get caught acting outside of the rules.

Whether you run your own portfolio management firm or financial advisory practice or are part of a large organization, compliance and risk professionals can provide you with a wide range of support. Basically, they will tell you the truth straight up — but only because you needed to know. Some might even say that compliance and risk professionals are your best friend. This does not mean that your ‘best friend’ won’t raise concerns with you. On the contrary, they are one of the only people that won’t hide from unpleasant topics. If you had food in your teeth on your way to speaking to your crush in tenth grade — well, you bet your best friend was going to tell you about it, embarrassing or not, because that was the sort of thing you needed to know. That’s a lot like the type of “got your back” behaviour you can expect from compliance and risk professionals! Let me count the ways…

Smart compliance and risk can save you money
Yes, building up and remaining in compliance can feel expensive, but think about all the savings from regulatory fines and costly complaints that you have avoided if you do compliance right. Not to mention, using smart compliance technologies can actually put you ahead of your competition from an expense perspective.

If, like us, you embed compliance and risk algorithms and automation into the technology you use to run your advisory firm, like digital onboarding and money movement functionality, you will actually be able to run a more scaled-down risk and compliance department because the technology will do most of the work for you. At Advisor Solutions, as we build the products to serve financial advisors and portfolio managers, we have those compliance and risk specifications prioritized for the functionality we intend to provide, because we know this is what will keep you safe and competitive in the long term.

A culture of embedded compliance can protect your reputation
A firm on the wrong side of regulatory compliance runs the risk of having negative stories spread in the media. This kind of embarrassment and reputational damage could result in losing those clients you have worked so hard to attract.

Getting into trouble repeatedly also makes you lose that goodwill capital with your regulators. Let’s face it, like it or not, these are the people you need to get along with to make your business work and retain the licenses you need to operate. If you squander your reputation and become known by the regulators as playing fast and loose with their rules, you can expect far less cooperation and more time and money again, just to operate in a “business as usual” capacity. Against competitors with a better reputation and banked goodwill, this can be the differentiator of success.

Instead, if you have the tools with embedded compliance and risk functionalities working for you, keeping up a good reputation with clients and regulators just got a whole lot easier.

Compliance and risk professionals are great at finding creative solutions
Most of us come from backgrounds in legal, compliance, and other disciplines that require critical thinking to succeed. Odds are, we also spent time in the businesses we are supporting. At Advisor Solutions, we figured out a way to incorporate compliance and risk at the front end, to build our creative wealth management technology solutions so that you can think less about it. By automating functionalities that used to be performed manually by portfolio managers or other employees, we have freed up those folks to focus on the other challenges facing our business. Smart compliance makes everyone look good and increases productivity!

Compliance and risk professionals are on your side
Once when I was working in the wealth industry, an executive remarked to me that a certain compliance professional with whom he was frustrated, had forgotten that without a successful business, there is no compliance department! Great compliance and risk professionals understand that both parties are working toward a common goal — the success of the business.

That said, where the technology allows the risk professional to become aware of a potential issue, or identifies that someone may be doing the wrong thing, compliance and the business will be required to investigate the matter and take appropriate action. Just like your best friend who wouldn’t let you ask your crush out on a date with food in your teeth. And while the short term embarrassment and work that may go into solving the regulatory issue at hand may feel painful, it is a heck of a lot better than letting your business suffer in the long term because it didn’t avoid the obvious rule breaches it could have by adhering to the advice of a compliance or risk professional or the technology that assists them.

In the ever-evolving landscape of the financial industry, the intersection of technology and products is pivotal for effective compliance. Our commitment to innovation in this space underscores the importance of staying ahead in risk management, ultimately empowering you to make informed decisions in your financial planning journey. Thank you for tuning in, and stay connected as we continue to explore and enhance the dynamic realms of technology, products, and compliance. You'll be hearing from me again soon!

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