Three tips to help advisers scale the compliance mountain

According to a report from the Fidelity International-owned platform, Business challenges facing financial advisers, compliance procedures will come under increased scrutiny from the regulator this year and so it set out to offer practical solutions to help advisers meet their regulatory and compliance obligations. These included:

Keep it simple

"Simplifying processes and clearly defining roles within the firm can go a long way when it comes to better managing compliance and regulatory requirements," said FundsNetwork head Jackie Boylan. "Stripping processes down to the bare necessities and streamlining them into simple, easy-to-understand procedures will help advisory firms not only become more efficient but will also help achieve more consistent outcomes for clients. This can make regulatory reporting easier.

"The process of defining roles and responsibilities is also key to ensuring no essential regulatory or compliance steps are missed, and everyone is aware of the responsibilities and what they are accountable for. This goes hand-in-hand with having clear, simple processes that are applied to every client case, so reducing the risk of error or misunderstanding."

Keep a trail

"Advisers should be encouraged to take advantage of reporting tools offered by platforms and fintech providers," said Boylan. "Many enhanced reporting solutions, for example, were developed in the wake of MiFID II, with the intention of helping companies comply with the new regulation.

"Using these tools can help firms to be compliant while also reducing the need for manual processes, thus improving efficiency. It is also good practice to have an audit trail of all communications. Technology can be a great help with this too, cutting time and cost spent on auditing and reporting that could be better spent with clients."

Integration is not the enemy

"With compliance and regulations changing all the time, why adapt business practices to a new rule one day only to have to change it again the next?" observed Boylan. "The more firms can do to integrate regulatory requirements into the way everyday business is done, the easier it will be to embed these practices and remain compliant.

"As an example, when first introduced, call recording was a significant burden but now it is embedded in most firm's practices. Furthermore, by integrating such practices at the outset, it will also make any future adaptations easier to implement."

‘Feeling the strain'

The FundsNetwork research was conducted by NextWealth, whose founder and managing director Heather Hopkins commented: "We all know regulation is needed to protect investors, but advisers are feeling the strain of increased costs to comply and are also frustrated by constantly moving goalposts.

"Many of the advisers we spoke to in our research complained that the volume of disclosure was making it harder to engage clients with their investments. Keeping things as simple and consistent as possible within a firm and keeping a trail can help firms feel protected. And steps by providers to better integrate data and systems should help to reduce the regulatory burden."

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• Topics
• Regulation
• Compliance
• Jackie Boylan
• Fidelity FundsNetwork
• NextWealth
• Heather Hopkins