ComplyConnect Spotlights Industry’s Top Regulatory Priorities

Sander Ressler, Expert Columnist, Compliance & Regulatory Affairs, WSR

First Major Gathering Of Wealth Management Compliance Professionals Since Pandemic, Plus WSR’s Latest Compliance & Regulatory Trends Survey

When general industry participants think of wealth management compliance – which is, in effect, only when they must – they tend to envision a very old school, plodding, static field, characterized by unchanging attitudes and older professionals.

Not reality

But as most people in the know can attest, the reality is starkly different.  Wealth management compliance continues to face significant changes each year, driven by shifts in regulatory, legislative, technology and industry developments.

WSR’s Latest Compliance & Regulatory Survey Results

Perhaps the clearest example of this can be found in WSR’s latest compliance and regulatory trends survey of a select segment of registered readers, concluded at the top of this week, summary highlights of which are as follows:

  • 67% of Chief Compliance Officers at RIA firms with $500 million in client assets or less have fewer than 8 years of regulatory and compliance supervision experience
  • 72% of this industry group wear two or more hats, including their compliance role, typically encompassing operations, administration or technology
  • 77% of all survey respondents “strongly agree” that crypto regulatory and compliance concerns will fade rapidly, as the asset class continues to decline in relevance to the broader wealth management industry
  • 84% of all survey respondents “strongly agree” that the most relevant and timely regulatory and compliance issue is cybersecurity, with a close second being the new SEC marketing rule
Cybersecurity in focus

What a difference a year makes!  What’s more, many of these survey findings were validated anecdotally when I attended the first annual ComplyConnect conference earlier this month in Austin, Texas.

Another Industry Conference?

Before the eye rolls commence, let me start by saying this:  I get it.  

The wealth management industry seems increasingly oversaturated with conferences, especially as new and more well-established events jockey for position in the post-pandemic new normal.

As just one of many examples, my colleagues at WSR have written at length about how FutureProof has emerged as a potential serious competitor to the annual T3 wealthtech conference.  (I get that the former bills itself as a “wealthtech festival,” but hopefully you get my point.)

But there was, legitimately, something that felt different about the vibe of ComplyConnect.  

Perhaps it was the newness of being back together with people who were all involved with compliance, regulatory and legal aspects of the industry. 

It was the Texas BBQ!

Maybe it was the new ComplyConnect banner under which the three-decade old “NRS Conference” was held and has been expanded on in an effort to go beyond the offerings of just one company.  And perhaps it was the Texas Hill Country BBQ. 

But at the core, ComplyConnect landed well simply because it filled two rising urgencies in the wealth management space, especially among compliance professionals within the fast-expanding RIA segment.

First, the event enabled members of this segment with an opportunity to learn more about the intricacies of their roles with outside experts and resources, a very vital outcome given how many of them were with relatively newly established firms.

And second, it provided an opportunity for these professionals to no longer feel as if they were on an isolated island with their jobs.

Unlike most industry education conferences, which often devolve into booze fueled networking, lead generation events, and a chance to collect new pens — this event, which happened in early November, featured professionals hungry for the information offered and the chance to exchange industry best practices. 

A chance to collect new pens

Starting Off Strong 

This may may seem unimportant, but I’d like to start with how smoothly planned the basic logistics were.  For starters, the registration was well staffed and in close proximity to the main event rooms.

And here’s something else that was a welcome change from other major industry events: Amy Kadomatsu, the CEO of COMPLY (the parent company of ComplySci, NRS and RIA in a Box) and many of her C-suite team, were out in force at registration. They were not just saying hello but literally working the table.  By itself, this is a gigantic difference from the vast majority of other industry events.

Amy Kadomatsu, CEO, COMPLY

In a statement shared by COMPLY, Kadomatsu said, “We wanted to find a way to help bring together and celebrate compliance professionals.  The participation and enthusiasm we have seen from compliance professionals recently for our educational series and symposium series encouraged us to think bigger and what better way to live out our commitment as a true champion of compliance professionals, than with the launch of ComplyConnect.” 

What Was Most Popular?

The main sessions and breakouts were well attended.  Sessions providing actionable steps for compliance professionals found themselves to be standing room only. 

Consistent with WSR’s recent survey findings, in my personal experience at ComplyConnect, cryptocurrency regulation was not a major topic.  Indeed, in the aftermath of the most recent collapse, sentiments at the event were quite clear:  The adults in the room are happy that the crypto market is less attractive and fewer people than ever want to engage in an unregulated, unstable and unmanageable space. 

Not to say I told you so but, I did (more than a year ago in my column, “The Crypto Craze Could Murder Financial Advisors’ Careers”).

So what was popular?  Again, lots of parallels between what was overheard at this event and WSR’s latest compliance survey results.

By far and away sessions on the implementation of the SEC’s new marketing rule as well as cybersecurity regulations changes saw the strongest interest and engagement.  And a related note, discussions on third-party vendor risk were also especially well-attended.

According to COMPLY’s Chief Regulatory Officer John Gebauer, who until recently served as NRS’ President, “The education and professional networking delivered by the ComplyConnect conference is more important than ever given the more than 30 SEC rule proposals this year that may be approved and due for implementation in the coming year.”

Leading The Horse To Drink From A Fire Hose

For as encouraging as this event was in many respects, it also revealed that the small and mid-sized RIA segment (think $750 million in assets and below) is facing a significant challenge when it comes to identifying and filling senior compliance roles.

Let’s start with the fact that most of the Chief Compliance Officers from this segment of the industry that I spoke with at ComplyConnect were not lifetime compliance professionals. Many were mid-level and even junior operations and supervisory staff who were asked to wear multiple hats not that long ago.  Indeed, most of them seemed to have on average three to five years of executive experience. 

Wearing multiple hats

Next, bear in mind that, for most of the past three years, courtesy of the pandemic, these RIA compliance professionals were essentially on their own versus having venues where they could exchange knowledge and learn from peers via any in-person gatherings.

Finally, all of this reflects a deeper problem:  Many RIA firms, particularly small to mid-sized firms, seem to view internal compliance professionals as a cost center, versus a growth enabler.  This means the quality of compliance professional these firms hire will continue to be governed by the tyranny of basic math.

The tyranny of basic math

Here’s what I mean in plain English:  

  • Let’s say an RIA charges its clients a 1% fee of assets under management. 
  • This firm will need $8 million in additional discretionary assets under management to hire an experienced executive for $130,000 in base salary.
  • Or, the RIA can simply hire a novice compliance leader, or merge the compliance responsibilities within a broader administrative or operations job, for just $50,000. 

Which option is this hypothetical firm more likely to take, if it views compliance as, at best, a necessary evil?  I think we all know the answer.

Of course, it also doesn’t help much when RIAs are competing on a national basis for top compliance talent against every firm out there with deeper pockets.  Now that remote work has been normalized, the reality is that truly seasoned compliance experts can demand top dollar from some of the largest wealth management businesses across the country.

Towards The Future

Can events like ComplyConnect help bridge this rising compliance expertise gap, especially within the small to mid-sized RIA segment?  Based on my experience, the event is certainly off to an encouraging start.

There’s clearly a massive pent-up demand for high quality and real-world educational experiences, especially among the younger and less-experienced compliance executives that are being catapulted into senior compliance roles at new and smaller RIA firms.

But like all industry events, there’s room for future improvement.

For example, I’d like to see ComplyConnect build on the value the event offers to the industry by tiering breakout sessions.  Because there is typically quite an experience gap between internal compliance professionals at relatively new and smaller firms and their peers at larger enterprises, it makes sense in the future to offer a basic level of the event content to less experienced professionals, while providing in parallel a more advanced version to seasoned professionals, especially those representing some of the larger firms in the industry.

It would also be helpful for the event organizers to view ComplyConnect as one part of a broader continuum of events throughout the year, segmented by geography and firm peer groups.

Bringing together follow-up roundtables comprised of professionals from firms of similar size, professionals of similar experience and teams in similar geographies, perhaps on a quarterly basis, would be a great start for the ComplyConnect organizers.

Bring together follow-up roundtables

Indeed, the concept of follow-on gatherings throughout the course of the year that can provide opportunities for deeper dive conversations on fast-evolving compliance, regulatory and legal hot button issues will be a smart move for any compliance-focused group seeking to fill this industry-wide need.

But – at least for now – it would appear that ComplyConnect has gotten the jump on any potential competing events in this segment of the industry.

Sander Ressler, WSR’s Expert Columnist, Compliance & Regulatory Affairs, can be reached via

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