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How Government Regulations Affect Financial Advisors

More regulations. More research. More adjustment. More work.

The finance industry is highly regulated in order to protect investors. While changes in the industry are generally positive, new regulations mean more work for the professionals who adhere to them.

Sometimes these changes mean a steep and confusing learning curve that include significant business practice changes. But being transparent, using technology, seeking out continuing education, and leveraging your community can help your business stay ahead of the regulatory curve.

Be Transparent

In 2019, the U.S. Securities and Exchange Commission (SEC) adopted a new set of rules and interpretations regarding investment advisors’ fiduciary duty. A critical component: “Firms will be required to provide information about their relationship and services, fees and costs, conflicts of interest, standard of conduct, and whether or not the firm and its financial professionals have legal or disciplinary history,” according to SEC Chairman Jay Clayton.

The intent is that this information should help investors make an educated choice in their preferred financial professional — and starts a healthy conversation and relationship between the client and advisor. The rule goes into effect June 2020.

This trend is going global, too. The UK’s 2012 Retail Distribution Review banned commissions on investments. Instead, advisors charge an agreed-upon fee upfront — another industry move toward transparency. Experts expect worldwide markets to shift toward this fee model in an effort to better serve the customer.

Look to Technology for Solutions

As rules and client expectations change, technological tools can help wealth management advisors keep up. In today’s regulatory environment that prioritizes transparency, software can greatly improve your data tracking and reporting.

Technologies like customer relationship management software, file sharing, client portals, and marketing communications platforms can not only track compliance with regulations but also provide profit-boosting opportunities. Productivity is the name of the game here. Spending less time on client outreach, scheduling, and management frees up valuable hours in your weekly schedule. Additionally, your clients expect these improved and efficient online services.

Join a Community

It’s difficult to keep up with fluctuating industry standards and rules — let alone the best practices to ensure your business is successfully complying and thriving. With Farm Bureau, you’re not alone.

When you join Farm Bureau as a Wealth Management Advisor, you’ll have  access to a full team and quality resources that can support you in all aspects of your business. We keep an eye on changing regulations and provide you with information to share with your clients, freeing your time for the important job of working with clients to shape their financial futures.