The third week of October 2023 marked a momentous occasion for me. It was my first ever attendance at the National Society of Compliance Professionals conference, and I must say, it did not disappoint.
The content for this 3-day event spanned all topics that a Compliance professional could be interested in. Here are a few key areas that I homed in on.
Volume and Pace of Change
In the opening keynote address, Commissioner Mark Uyeda from the US Securities and Exchange Commission provided great insights on some key challenges facing our Compliance community.
- There are many changes hitting compliance professionals, including Regulation Best Interest. He highlighted key changes from now until December 2025, and the point was less about the specific change. Rather, he was articulating the sheer volume.
- Because of the volume of change, there will be challenges around implementing change. Compliance professionals need to get ahead of the changes and understand how they impact their business, policies and procedures, and any plans for using technology to help.
Regulation Best Interest
In addition to being a topic during Commissioner Uyeda’s remarks, Regulation Best Interest also commanded its own breakout session that was standing room only, with an all-star panel. The session – “Scaling Regulation Best Interest” featured Kim Chapman, CCO at Berthel Fisher & Co Financial Services, Janice Powell, CCO at DFPG Investments, and Ed Wegener, Managing Director at Oyster Consulting LLC.
The focus of the session was on the practical side of how firms need to implement their Reg BI policies and procedures, without needing to review EVERY transaction. This was a practioner’s dream session with real-world insights. My main take-aways from this session were:
- When reflecting on Reg BI exams, there was consensus around a high degree of regulatory scrutiny surrounding account type rationales. The concept of determining the appropriate account type (brokerage vs. advisory) is rather novel for most financial professionals. Given the sensitivity around costs and the impact on investors, it is no surprise that regulators want to make sure the investor is in the right type of account to meet their needs.
- There is also scrutiny around how often firms need to review the account type for best interest considerations. This isn’t a ‘set it and forget it’ scenario that you check off during your New Account Opening flow. When financial professionals and CCOs think about the right time to consider account type rationales, they will need to consider life events, change in product and/or suitability needs, as well as your annual review.
- There were many insights shared around practical implementation. For example, focusing attention on training and communication with financial professionals, over communicating policies around when the best interest rationale needs to be documented, and what compliance should expect from the rationale, do not rely on your limited product availability to justify an account type for the investor, and how firms should consider documentation needs ranging from investment proposals to best interest recommendations and account opening paperwork and standard disclosures.
Being a Valued Business Partner
The final session I wanted to highlight was how and why the CCO needs to become a valued business partner within the organization. The “why” circles back to our first topic – the pace of change. In this environment it is critical for the CCO to be part of the solution, not just the messenger of the problem. To do that, CCOs should consider the following tactics:
- Invest in your relationships with your colleagues and business partners. Get to know them. Be personable. We all know that it is easier to work with someone and take on challenges if you have good relationships with them.
- Know yourself and your organization. Learn how to be effective, who can help in various circumstances, who you can trust, and position yourself to play to those allies.
- Embrace what you don’t know and find a business partner to compliment you. Nobody can do it all. And there are few things that will break trust more than trying to fake your way through something and not acknowledging that you need help.
Overall, between the content, the learning opportunities, the networking, and the 6:30 AM 5-mile run with people that I just met, I would consider this one of the best events I’ve been to. I would encourage anyone in the compliance space to mark your calendars for next year’s event. It is definitely worthwhile.