The original report identified the top five challenges broker-dealers face. These were:
  • Sales practice monitoring
  • Regulatory change
  • Suitability review
  • Product education
  • Operational Processes
The top five challenges in 2012 were:
  • Suitability review
  • Sales practice monitoring
  • Regulatory change
  • Product education
  • Social media
Suitability review was the only challenge to advance in importance over the two years. This is a reflection of FINRA’s increased reviews. Fines imposed by FINRA over suitability increased more than 100% from 2010 to 2011.
 
It’s predicted that social media will become an increasing concern over the next few years. The 2012 report also showed an increase in automated compliance systems over a combination of automated systems and eyes-on compliance reviews.
 
2011 also showed industry regulators following through more consistently on warnings for disciplinary action. As a result, compliance departments are growing despite the move toward more automation. Compliance departments within firms are also more visible.
 
Overall, although compliance costs are greater for smaller firms, the report noted that compliance costs should not exceed 7% of a firm’s budget.
 
Other trends from the report can be accessed here. Overall, the report shows that regulators are having the greatest impact on the industry, yet the stodginess of industry participants in adopting new and better practices is not necessarily going away.
 

This Website Is For Financial Professionals Only

Why Join Advisors4Advisors from Advisors4Advisors