For a compliance professional to successfully mitigate the risk of noncompliance at their investment firm, they must stay ahead of trends and proactively equip their firm with the appropriate compliance protocols and procedures. And in today’s digital-first environment, that often means investing in the right technology.
In our propriety research and industry analysis, we examined how financial firms are functioning amid heighted regulatory activity, what risks are taking priority and where investments are being made. In doing so, we aggregated data and insight into not only how investment firms are using compliance technology now, but how they will do so in the future.
How compliance technology helps investment firms avoid rule violations
The rate at which investment firms are adopting compliance technology and software has sky-rocketed in the last decade. Much of it coming as a direct result of heightened regulation and increased risk points.
When done right, your compliance technology can alleviate the stress of:
- Monitoring employee emails.
- Archiving employee emails. Should the firm be audited or need to perform an audit of its own, chief compliance officers would be able to draw from all employee communications for data.
- Protecting the work that remote employees do. Granting remote employees VPN access and virtual desktops ensures that the work that employees do for your firm is protected from cyber criminals.
- Testing and improving policies and procedures that are in place. This ensures that if a system isn’t working, your firm can fix them before a violation occurs.
- Using a compliance calendar and ensure that chief compliance officers never miss an important date.
How investment firms are investing in regulatory compliance technology
As investment firms strive to address new risks and regulations, they are faced with a decision: continue with manual processes, checking and rechecking potential risk points, or invest in a comprehensive regulatory compliance technology designed for accuracy and dependability.
The right compliance technology partner can yield numerous benefits for your firm, including a more cohesive culture of compliance, precise compliance workflows and the ability to meet heightened compliance goals.
Here’s how investment firms are investing in compliance technology:
- 86% of respondents say integrating compliance technology has made creating a culture of compliance easier.
- 52% of RIAs reported regulatory changes are causing them to consider increasing automation in the next twelve months.
- 64% of RIAs indicated accessibility and ease-of-use are important considerations in selecting compliance technology.
- 56% of survey respondents indicated their firm’s existing tech stack sufficiently addresses the SEC’s heightened regulations and priorities, whereas almost half of respondents, 44%, indicated their firm’s existing tech stack doesn’t.
- 60% of respondents indicated their firms haven’t implemented compliance technology to assist in their annual review processes.
Takeaways your investment firm should consider in implementing a regulatory compliance technology
Regulatory compliance technology can have several benefits for your investment firm. However, if your firm doesn’t thoroughly consider the functionality of the technology vs. your firm’s requirements, you can end up picking the wrong regulatory compliance technology which does more harm than good in the long run.
- No matter the size of your firm, your tech stack is crucial. Make sure your compliance technologies work well together, so your firm doesn’t end up where you started, manually processing data to keep your firm afloat.
- New technology doesn’t have to mean a complete transformation of your compliance processes. Make sure your procedures line up with what the technology does, meeting all your requirements to ensure there is no buyer’s remorse down the line.
- Compliance technology is a powerful tool, but it cannot be the whole of your compliance program. Take the time to integrate people, education and technology to create a truly effective compliance program.
Interested in learning more about the state of the industry? Download our comprehensive guide to compliance and regulatory technology.
RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.