Expanded Regulatory Guidelines Create New Challenges For Wealth Managers

Suitability and related regulations have grown in scope and impact in the Americas. New regulatory guidelines and requirements that further protect consumers and provide new objectives for wealth management teams are being addressed from a technology support standpoint, and NICE Actimize continues to lead in addressing these new challenges.

In recent months, both the SEC and FINRA have taken several actions to address emerging risks and trends in the securities industry. For example, in March 2023, the SEC issued a proposed rule requiring investment advisers to provide more information about using ESG factors in their investment decisions. In April 2023, FINRA issued a guidance alert reminding firms of their obligations under the SEC’s Regulation Best Interest (Reg BI). Reg BI requires firms to act in the best interests of their customers when recommending securities. In May 2023, the SEC charged two cryptocurrency companies with fraud for misleading investors about their products and services.

During this change, NICE Actimize’s product and subject matter experts stayed close to the regulatory environment to ensure alignment with its technology offering and the regulatory climate. Compliance officers are arming themselves with advanced monitoring and analytics technology to safeguard against advisor misconduct and other risks. The variety of regulated communications continues to grow to include email, phone conversations, video conferencing, and many texting and chats, which NICE Actimize’s surveillance solutions can monitor. 

Explained Osvaldo Berrios, SME, Financial Markets Compliance, NICE Actimize, “Now, compliance teams can have the capability to build trust and ensure the firm is compliant and its reputation is being upheld. Tools must also be flexible enough to tackle new regulations, such as Regulation Best Interest or Reg BI, to ensure that a compliance program is future-proof.”

Berrios added, “NICE Actimize supports firms as they regularly review the SEC’s and FINRA’s compliance focus areas and take steps to ensure that they comply with all applicable requirements. Firms are leveraging a robust compliance program to identify and mitigate risks. NICE Actimize continues to provide holistic compliance management, which simplifies and captures the various layers of data that a wealth management firm needs to monitor and assess. Part of this is a requirement to capture, and evidence results to the regulators. Whether it is using communication surveillance solutions to monitor digital communications between personnel and clients, or using market surveillance solutions that ensure that employees do not compromise the integrity of the markets.”  

Most importantly, NICE Actimize’s industry-leading and dedicated sales practices and suitability solution, which helps compliance supervisors validate client recommendations and account integrity, continue to support the growing requirements and complexities of the suitability category.

NICE Actimize’s Sales Practices & Suitability solution uses a built-in broker risk dashboard for an intuitive and instant view of individual brokers’ risks. By automating oversight and supervision, firms can ensure consistency and maintain a consolidated audit trail, lowering regulatory risk while improving productivity and efficiency. Consistent controls and processes, along with sophisticated analytics, help firms address sales practices and investment suitability requirements from regulatory bodies such as FINRA, IIROC, MiFID, CFTC, UK FCA, BaFin, AMF, CONSOB, HKMA, and ASIC.

In addition, its automated alert generation, reporting, and audit documentation eliminate manual look-ups and increase staff efficiency, generating high-quality alerts with fewer false positives while creating more consistent processes across the enterprise using fewer resources. Comprehensive audit trails, reporting tools, and hierarchical organizational views increase oversight and transparency, ensuring brokers advise clients with suitable investment recommendations, enhancing client satisfaction, and mitigating the risks of litigation, regulatory penalties, and reputational damage.

NICE Actimize’s investment in sales practices and suitability solutions, along with communications monitoring technologies, will continue to grow in its support for this critical market requirement.