How to Avoid the Most Common Compliance Concerns

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Many advisors suffer from the misconception that as long as their intentions aren’t malicious, they’re in compliance.

Sadly, this is not the case.

To catch the small number of bad actors in the industry, the rest of us must abide by the often-complex industry regulations. Failing to remain in compliance will lead to deficiencies, fines, and even enforcement action.

Here are the most common compliance concerns and how your firm can avoid them.

Recordkeeping and texting

Texting is the norm. It’s how we communicate with friends, family, and oftentimes even clients. The problem is that part of the obligation for an advisor's books and records is to record all communication with clients. This is why email archiving is necessary.

If an advisor communicates with a client on a channel that’s not archived, such as through a personal email account, WhatsApp, or text message, the record is not preserved, and the advisor is no longer in compliance.

This is an area where the SEC is cracking down. In December of 2021, JPMorgan paid $125 million to resolve SEC charges of recordkeeping failures related to communications with clients. How can you avoid a similar fate?