Financial regulation is one constant that firms and their teams must account for and navigate. For instance, as recent as August 2024, the U.S. Treasury Department unveiled anti-money-laundering rules affecting Securities and Exchange Commission-registered investment advisors. The idea is to make it more difficult for those with ill intentions to commit high-stakes crimes like corruption, narcotrafficking, and fraud.
It can be a tall order to stay compliant with what seems like a growing list of rules and regulations. Quickly adapting to these changes is how your firm can maintain operational efficiency and curb related risks. Customizable rules within industry software solutions are a must. Here’s a look at why and what they can mean for your operations.
1) Agility vs. Regulatory Change
Customizable rules within compliance processes make it possible to align with new regulations from the outset. This quick action can offer advisors peace of mind especially when they’re managing a lot of important details.
Another important facet is that advisors can account for expected potential regulatory changes and adjust their rules in response. Doing so can reduce the risk of non-compliance and incurring penalties.
2) Tailored Compliance Programs
Customizable compliance rules give advisors the agency to create compliance programs that are relevant to their specific situation. Plus, by focusing on areas that present the greatest risk, advisors can shore up resources as needed and prioritize compliance-related activities.
3) Enhanced Operational Efficiency
A proactive approach to compliance is never heavy-handed. Customizable rules present great value in that they help automate everyday compliance tasks. This efficiency frees up advisors’ time and energy to focus on problem solving and delivering client solutions. Advisors and their clients also benefit from the fact that automation can reduce human error and introduce more consistency in the compliance process.
4) Proactive Identification
Advisors are busy taking care of clients and helping them set and achieve their goals. Shouldering the burden of worrying about a potential oversight can distract them and negatively impact the client experience. Customizable rules can offer some assurance in that they can help financial professionals identify and address potential risks before it’s too late. Nothing ruins a good day like news of a penalty or reputational damage, especially when it could have been avoided.
5) Scalability and Growth
With growth can come growing pains. However, customizable rules can account for internal changes and new regulatory requirements. This flexibility is also an asset in that advisors can be ready when new changes come into the fold. It can mean the difference between being caught off guard and prepared when the time comes.
6) Investment Advisory Contracts
Advisors can bank on the fact that customizable compliance rules help them ensure investment advisory contracts adhere to regulatory requirements and are relevant to the client’s situation. Specifically, rules can be set to monitor trade execution practices, prevent unauthorized transactions, and meet regulatory standards.
7) Client Communications
Advisors can use rules that define parameters for the content and frequency of client communications. This layer of protection can help maintain transparency and meet compliance goals.
8) Better Recordkeeping
Customization can bring efficiency to documentation. Advisors can rest easier knowing their back-off activities meet regulatory standards. It can also help reduce stress and time preparing for an audit.
The bottom line: Customizable rules within compliance systems can help wealth management firms meet current and future standards. It’s never been easier to empower your back office with rules-based alerts that meet your needs. With rules-based, transaction flagging, and alert-driven auditing, your firm will make fewer missteps. And when facing inquiry from auditors, you’ll have the accurate information you need right at your fingertips. Learn more about Docupace’s surveillance and compliance solution here.
