Wealth Advisor Magazine September 2024 Edition - 7

ADVISOR TECH
Compliance Pain Points
he " new " Securities and Exchange
Commission (SEC) Marketing
Rule remains a high- profile headache
for compliance officers, but according
to a recent poll, high-tech challenges
like back-channel messaging, artificial
intelligence (AI) and cybersecurity have
become more pressing priorities.
The Investment Adviser Association
and consultants ACA Group and Yuter
Compliance routinely check in with the
people responsible for managing regulatory
risk. This time around, compliance
officers say they're busier grappling with
new tech than the nuances of evolving
guidance around established rules.
T
After all, while
the SEC keeps
refining the Marketing
Rule, we've now
had a few years to figure out what we're
allowed to say in anything that counts
as an " advertisement. " Compliance there
is more a matter of breaking old habits
than figuring out new processes.
But the proliferation of messaging
tools and machine learning applications
forces everyone to stretch into
unknown territory. That means monitoring
and logging electronic communications
at a minimum. Those records
need to be kept.
And of course, the network needs to
remain secure. Compliance officers often
need to double as cybersecurity cops,
coaching advisors on mistakes to avoid
while keeping an eye on outside threats.
AI, on the other hand, is unknown
territory. Are we liable if a chatbot " hallucinates "
and delivers bad advice? How
do we monitor that? As always, the SEC
will want to know that you've at least
thought hard about the ramifications
before deploying any new toys.
Hot Compliance Topics
59% Electronic Communications Surveillance
57% Advertising/Marketing
46% Artificial Intelligence
37% Cybersecurity
16% Private Funds
10%
8%
8%
Conflicts of Interest
Vendor Due Diligence
ESG Communications Surveillance
6% Anti-Money Laundering
6% Books & Records
Numbers add up to more than
100% because participants were
allowed to pick multiple responses.
Source: 2024 Investment
Management Compliance Testing
Survey, IAA / ACA / YCC.
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SEPT/OCT 2024 | 7
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Wealth Advisor Magazine September 2024 Edition

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