Commonwealth’s General Counsel Describes the Legal Challenges and Trends Currently Facing the Wealth Management Industry
In the highly regulated industry of wealth management, legal and risk functions exist to prevent stepping into unseen pitfalls that threaten a firm and its financial advisors with fines, corrective orders, lawsuits or worse.
The nature of the work is often unapplauded. After all, the end goal of legal and risk management is frequently to ensure that nothing happens.
This means legal and risk professionals frequently toil away in the background, incorporating laws, rules and best practices into the firm’s day-to-day operations, with much of the hard work they do sight unseen.
As part of our celebration of Women’s History Month, WSR honors an outstanding enterprise guardian – Peggy Ho, General Counsel and Chief Risk Officer of Commonwealth Financial Network, as Woman General Counsel of the Year in the WSR Pathfinder Awards series.
With 14 years of experience in compliance, legal, risk and government relations at LPL Financial, Ho took the reins of legal and risk at Commonwealth a year ago, transforming her team by empowering them with new skills and resources and enhancing processes and metrics to identify issues quickly and focus her team where attention is most needed.
We spent time with Ho to learn about the most pressing legal challenges and trends in wealth management and why she selected a legal career in the wealth management space.
WSR: How did you choose a career in law, and why did you focus on the wealth management industry?
Ho: When I was younger, my dream was to become a U.S. diplomat. I went on to complete a joint degree program in law and international relations at Georgetown University.
When I realized that foreign service wasn’t the right path for me, I began my legal career with Ropes & Gray in Boston. I focused on private equity with an emphasis on the debt finance of large business transactions.
When I decided to leave private practice and go in-house, I was fortunate to land with LPL Financial. I wasn’t necessarily looking for a career in financial services, but I think financial services somehow found me. I joined as a transactional lawyer and gained experience in compliance, legal and risk.
My proudest accomplishment was building a government relationship team, which grew into an incredibly effective advocacy program. All these experiences have prepared me for my current opportunities here at Commonwealth.
WSR: What are the greatest legal challenges and trends facing the wealth management industry today?
Ho: As we all know, the wealth management industry is very highly regulated, and the continued debate over standard of care and fiduciary status is one of its biggest challenges. While investor protection is paramount, both the industry and our regulators need to work together to find a system that delivers these protections while also allowing firms to conduct their business and provide financial advice to our clients.
The financial exploitation of our senior and vulnerable clients is also a key concern and another area where the industry and regulators must partner. Additionally, I would say the challenges posed by privacy and cybersecurity risks are growing exponentially.
These are areas we take very seriously at Commonwealth, as evidenced by the development and growth of our senior investor protection team and our continued investment in the resiliency of our cybersecurity infrastructure.
WSR: If you could make any change to the laws governing the wealth management industry, what would you change and why?
Ho: Our goal should always be to protect investors and ensure that they have access to the advice and services they need to achieve their financial goals. Going back to the fiduciary debate, I hope that regulators will allow the current framework of regulation (Reg BI and the DOL fiduciary rules that are currently in place) to settle.
I believe the industry needs the time and space to implement these rules and allow them to work before forcing new rules into the mix. The constant churn and change of new rules lead to confusion and uncertainty, not just for the industry but for the investors we protect and serve.
Janeesa Hollingshead, Senior Editor at Wealth Solutions Report, can be reached at email@example.com