Leveraging Financial Regulation as a Core Component of Your Wealth Firm’s Growth Strategy

InvestorCOM recently spoke with Jeffrey Wilk, Director at Oyster Consulting LLC, Rick Ohlrich, Chief Compliance Officer at RFG Advisory and Rob Dearman, CEO and Chief Innovation Officer at DCG Insight to discuss best practices in adopting organizational change, how one RIA firm is leading the transition to technology, and tips to reducing compliance project friction.


Parham Nasseri [PN]: Jeff, what have you seen in your career in terms of best practices for adopting change across organizations?

Jeff Wilk [JW]: There are so many ways to approach that question. Sometimes I like to start off with a quote. I think in this case a Winston Churchill quote about not letting a good crisis go to waste. Maybe you twist that one to say ‘don’t let a new regulatory deadline go to waste’. What I mean by that is, digital transformation takes time. Leveraging technology takes time, but you’ve got to start someplace.

What I have seen in my career and in the consultant practice, is different firms have different ways of looking at technology and sourcing budget for technology. Typically, regulatory has a way of trumping everything. So if there’s a regulatory deadline, if there’s a new approach, a new mission to be accomplished and there’s budget available on the compliance side, maybe there’s a way that can be leveraged towards a technology step on that journey to build out something more broadly than what the task is at hand.

Take a broader look. Sure, maybe in the meantime or in some cases you may need to do things in a manual, or a partially manual way, but don’t let the opportunity go to waste to bring a larger technology focus to your overall platform.

PN: Jeff, love that response and the comparison to not letting a crisis go to waste. Rick, as a Chief Compliance Officer at one of the fastest-growing RIA firms in the country, maybe you can shed some light in terms of how you’ve led this transition at your respective firm.

Rick Ohlrich [RO]: One of our primary pillars is technology, fintech exploration, and consolidation to alleviate the friction and the chaos in the office with the advisor and with the client. So, as simple as we can make that process and as efficient and effective, we know just by understanding how advisors operate, that they’ll have more time to meet with more clients or devote longer periods of time to those clients and do a better job. We all know that paperwork is just ripe for all types of problems, errors and different things.

When we looked at strategic change, specifically in this instance combined with the regulatory needs, when we’re talking about large, seismic change to the firm there is a need to involve the broad leaders of the firm – operations, compliance, marketing, legal, etc. – and start to talk about how this is going to impact the firm. Use that regulatory change to employ the technology to drive or reengineer the operational environment of your firm. Don’t look at it just as a headache, but how you can make the firm better and of course the advisors’ lives better. There is a balance to be struck amongst the various stakeholders.

As much as we would like to say we’re all on the same team, there are still competing interests within the firm, whether it is budget or otherwise. So how do you address the requirements and still consider the business’s costs, the efficiency interests, and most importantly, make the solution relatable at the client- and advisor-level? If you can pull off the proverbial hat trick, you want the firm and the advisor to be protected, you want to operate optimally, and you want my mom to understand what she’s receiving on the disclosure side all at the same time. If you pull that off then you’ve got a pretty good marriage between taking a regulatory change, implementing technology, and improving your processes.

The one insight I would add, and I’ve seen this at a lot of the firms I’ve worked at, is that your firm will think you’ve got the best thing ever and then it gets pushed out to the advisor and it’s a disaster. So, I think it’s very important that as you incubate these things before you go live, bring the advisor in, and let them beta test it. That’s really what we’re doing as we speak with InvestorCOM, is having a small group of our advisors kick it around and check it out.


PN: Rob, there’s been a lot of mention around eliminating friction or reducing friction. You’ve lived at that very intersection between regulations and helping firms eliminate or reduce friction, do you have any tips and tricks to share with our audience?

Rob Dearman [RD]: The best practice acronym that I have for my clients on this one is ‘HUDL.’ What you don’t want to do is make this just another compliance project. You want to HUDL.

H is holistic. We have to cover all of the places where the advisor is affected, the investor is affected, and the middle and the back office is affected.

The checklist for ‘holistic’ is ‘T-O-P-I-C-S’:

T is tech. How does it affect our current tech stack? Can we leverage something that’s already there?

O is operations. How does this affect the way that we touch this? Can we automate this?

P is platform. What do you already have out there on your advisory platform? Your 401k platform? Your brokerage platform?

I is investments, or product master, or investment research. How does this go into the product master? How can I real-time link up my master data management to this solution?

C is compliance risk, or regulatory risk, or legal risk.

S is service. Many times, service gets forgotten. What’s the ongoing service experience look like? Am I equipping and forming and empowering that end user to be empowered to do as much for themselves as they want to do for themselves? I am especially talking about staff personas.


U is unified or unifying. Many times, compliance is going into their cave coming out with a solution that works for them and they’re going to the tech guys and saying ‘I need you to do this.’ They’re not having the conversation with the recruiters, the relationship managers, the ops guys, or the tech support guys.  It’s an opportunity to do some re-engineering and make the process better.

D is digital, digital-first. We need to stop thinking about forms and start thinking about the data that informs the process. I’m always looking for that UI that is digital-first to eliminate friction and make it as natural as possible for the target persona.

L is loop. You’ve got a feedback loop – Rick just talked about it. Who are you building this for? Reps need a way of educating their clients at the same time as satisfying their compliance need. You’re not going to know if you hit the mark unless you’ve got a great feedback loop and a process that listens to it and refines your process on an ongoing basis based on that feedback.

PN: Jeff, there are a lot of digital-first approaches which is a strategic opportunity. How do you mitigate the initial heuristic, which is to go manual, and create yet another form?

JW:  That’s a great question, Parham. I’m thinking about an earlier comment I made about using the crisis or using the spotlight that you’re in at the moment to your advantage. I think the point here is to actually get out from under that spotlight. Look to your left, look to your right, and look at the different technologies that you may already have around you but you’re not necessarily thinking of how they may come together.

One of the things that I found surprising is that when you take that step back and you look to your left, you look to your right, you talk to your current technology providers, firms like InvestorCOM, about the situation it is you’re trying to solve for, more often than not, you get surprised in a good way that there’s a tool. Maybe it’s not a complete solution or a whole toolset, but in combination with other pieces that you already have, you can put something together to be a far better process than just another forum to get you through this time. It puts you on that other step, that next step in your longer-range journey of becoming fully digital and leveraging technology across the business.

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If you enjoyed this article, you can listen to the full discussion online – Watch the replay of the webinar, PTE 2020-02: Regulatory Compliance, Technology and Growth Opportunities