Compliance should be a conversation

Let’s be honest – when most advisors hear the word “compliance,” they think of the word “no.”

We know, intellectually, that compliance professionals are protecting our clients and our businesses. We’re looking after people’s entire financial futures in a tightly regulated industry. But at the same time, advisors can’t help but feel as if compliance teams exist to shoot down their marketing plans and investment strategies. When I was an advisor, I admit I felt frustrated at times by a few “noes” from compliance.

When I switched career tracks to become a compliance officer myself, I quickly realized that the two roles have more commonalities than differences. Both require an understanding of the financial landscape, the ability to navigate complex regulatory structures, and a desire to do what’s best for the client.

So how do we bridge the gap between that ideal and the reality of interacting with compliance?

First, we must recognize that compliance teams have a lot on their plate lately. And if your compliance needs are handled solely by a custodian or another big institution, they are thinking on a completely different scale than individual advisors. There are so many factors to account for and so much more work to do safeguarding against institutional-scale fraud and money laundering, they need some way to make the work possible.

Practically speaking, that looks like black-and-white regulatory interpretations. And if you’re an advisor, it can feel like being treated like a checkbox on someone else’s to-do list instead of a business trying to innovate.

When my firm shifted from the office of supervisory jurisdiction model to an RIA, we created a structure that allows for a broader scope of services while still operating within the confines of regulatory guidelines. The rules remain the same, but the approach to their implementation becomes more fluid. I’m certainly not saying compliance should be the Wild West. But compliance teams can foster a two-way dialogue and mutual feedback loop with their advisors. This ensures adherence to rules while aligning with the common goal of serving the clients’ best interests.

Think of it this way: compliance isn’t just a set of boundaries – it’s a conversation, one that involves both the advisors and the compliance team. By maintaining an open dialogue, we can work through concerns together, finding solutions rather than confronting roadblocks.

I have seen night-and-day contrasts in the approval processes for marketing materials between different compliance teams. Do you want to be included in a local media “best of” business list? One team may shoot you down and say, “Better safe than sorry.” Another may allow it with particular disclosures. Both compliance teams have made interpretations that protect from risk, but only one has helped the advisor potentially attract new clients.

By no means am I suggesting that we should push the envelope of regulation. Instead, I would love to see more exploration of the full range of possibilities within the rules that have been established to protect both clients and advisors. I urge both advisors and compliance professionals to rethink their approach toward each other. Instead of viewing compliance as an obstacle, let’s see it as a shared responsibility and a conversation.

View the original article here.


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