Resilience in the Face of Regulatory Change

In 20 years of committed advocacy for a healthier, more business-friendly environment for our members, FSI has never seen regulators seek to create so many rules in such a short period. Indeed, aggressive agendas at both the federal and state levels have place unprecedented demands on the entire industry

At this year’s OneVoice, a panel spoke to the importance of independent firms and advisors remaining resilient when they feel like they are getting pressure from all directions. It featured Amanda Hawley, Managing Director and General Counsel at Atria Wealth Solutions; Matthew Watts, Senior Vice President, Supervision, at Raymond James; and Ben Biard, Managing Partner, Florida, at Winget, Spadafora & Schwartzberg, LLP, who served as the moderator.

During the discussion, Hawley and Watts identified a series of best practices. For firms, they talked about ways to adapt quickly and then communicate change internally, while for financial advisors, each offered tips for how to pivot quickly amid a dynamic regulatory environment.  

According to Hawley and Watts, there are five stages involved with any given rule – and there are certain things firms and advisors can do to cope in each instance. Here are some highlights from the panel.

Stage 1: Awareness

“One of the most important things we can do: awareness,” Hawley said. “You have to say, ‘Okay, how do I know what’s coming down the road? How can I be prepared?’

“Some of our peer firms may have entire groups dedicated to navigating regulatory changes. Many of us have subsections within our teams devoted to the same thing. Whatever you do, however you do it, get smart. It’s the most important thing that we can do as we think through the ‘what’ and the ‘how,’ and how it all is going to potentially impact our business, our lives, our expectations, et cetera.”

Stage 2: Readiness

Watts said conducting a gap analysis and documenting the process is critical during the Readiness stage.

“Essentially, the rule is going to cause us to make a lot of changes,” Watts said. “And we have to assess how many of them there are, how big they are, and where they’re going to be. So, a bit of readiness is doing the gap analysis on what you need to do.”

Stage 3: Resources

“Coming up with the most amazing plan is wonderful, but not if you don’t have the resources to accomplish what you’ve set out to do,” Hawley said. “So, designing and thinking through what you can actually do, and then how to do it, is critically important.”

“FSI is and continues to be such an incredible resource for our industry,” Hawley continued. “As we think about the new rules, our expectations for them, proposals in the offing and, together, what it all means, FSI remains invaluable.”

Watts agreed and added, “If you feel like you just don’t have the resources, talk to FSI. They can help in a lot of ways when it comes to getting things done.”

Stage 4: Implementation

“Implementation is where the rubber meets the road,” Watts said. “Regardless of the size of the firm, where you think you’ll end up is never the case…so you must be ready for that roller coaster ride.”

Watts added that it is important to take a stratified approach to implementation. He suggested labeling to-dos as high-, medium- or lower-priority. This helps ensure the most important projects get tackled first. 

Stage 5: Reviewing and Checking In

Hawley explained that reviewing the application of a rule after it has been codified is an important part of the process.

“We know that it’s been now almost three and a half years since the birthday of Reg BI, and we know that the SEC has continually added enhancements to the descriptions of what’s out there,” Hawley said. “I think what’s really important…when the guidance comes out, is to read it, understand it, go back and look and test what we’re seeing in our own firms. Are we doing enough? Did we get it right? Is there more we need to change?”