Marketing and selling financial products is a highly regulated discipline, and knowing whether something is allowed is a complex but critical area of the wealth management industry.

Financial promotions are a particular source of focus from a regulatory point of view.  A combination of historic mis-sellings, plus the potential for things to go very wrong over social media, means that promotions are much more tightly governed than ever before. Indeed, the complexity around what is and is not a marketing activity is so easy to get wrong. Speaking on a panel could be construed as marketing; sending poorly worded tweets or other social media activity could also fall foul.

In addition, operating in multiple jurisdictions means there are decisions to be made over whether to take a broad-brush approach and apply the strictest regulatory regime to all products, or adopt the compliance rules of each country and have a more tailored approach.

Alan Blanchard Business Development (UK), Apiax, comments: “The regulator is looking at promotions very carefully, it now gives you an example of permitted tweets, for example, and the approach is very prescriptive. Marketing activity does not have to be explicit, and it is easy to slip up if you are not on top of it. It is multi-channel; content is repurposed and used in so many different jurisdictions, so it is hard to keep up with things. Anyone wanting to distribute must be on top of the  compliance and make sure they are not found wanting in any aspect.” 

In practice, this means the compliance process needs to be maintained and updated constantly and automatically so that anything being run is always up to date. 

The compliance process must also be customised so a firm can tweak it to fit its culture. However, although the regulation is prescriptive, there is variance between firms on whether to take a cautious or more interpretative approach. 

Technology can obviously help with all this, automating data collection and flow and making processes streamlined and efficient. But because firms take different approaches and regulation is not finite, there is the need for tech to be customisable and future-proof.  

“Tech cannot be one size fits all. You need to have something that allows firm-wide embedding of RegTech but the ability to hone it to the firm’s exact requirement is a  must too. Doing so means you can have a bespoke model for your firm that allows you to free up people in the way that you choose and basically have the benefit of that as well as the assurance that you have done your best to mitigate compliance risk,” says Blanchard. 

“In this way, you are taking the best bits of the regulation and marrying it with the required outputs of your firm to give the best possible outcome. The value of the brand needs to be consistently reflected, and the tech needs to give you the rails to do that,” he continues.  

Risks 
“This is hard for anyone to do, but then you have to streamline to mitigate risk –  knowing the rules, interpreting them, and future-proofing – and at scale. Tech ensures that you have a very clear process with checks and balances in place and a  flow system of how something has been approved and documented. Core populated tick boxes are clear with a ‘know your rules’ foundation- this is what limits your risk,”  says Blanchard.  

Having the technological capability is one thing; trusting it is another still. Sometimes the tech can seem too good to be true, especially because it is so easy to use – it can be embedded into other solutions like Salesforce and transform what was once a cumbersome process into something intuitive and one click.  

Transformative effect 
Blanchard comments: “People used to bypass compliance- they cannot make money if they need to double-check everything manually every two seconds. The one-click tells you yes or no and why – so they can decide on what is appropriate behaviour quickly. This comes back to an idea around the quality of earnings, where earnings booked are immediately bankable and not subject to review or subsequent remediation.  

The efficiency is much better, and there are fewer questions to the legal and  compliance team – thus freeing them up to focus on the very complex questions  rather than the tick box ones,” 

Indeed, the risk of getting compliance wrong is high. Still, the reward of getting it right can be transformative in terms of better operational efficiency and being prepared for the future, and being able to market accordingly to capture more AUM. Consumer duty is coming down the line, as is ESG, both are expected to have a significant impact, so those who have prepared well are better placed to do well! Consumer Duty, in particular, is a massive opportunity to leverage data for strategic insight or management information (MI).  

“Tech can provide better MI which is better decisioning. You can analyse and then visualise data to get to a better state. You see what the friction is according to client type, jurisdictions, etc. You can decide how and where you are going to do business and who with – whether something is still making sense, whether you should expand into a new client base or jurisdiction, and so on,” says Blanchard. 

Blanchard sees the current landscape as one where necessity becomes the mother of invention. Happily, there are lots of SaaS solutions, making the tech accessible.  

“It is usually possible to start small with a web browser and then ratchet up and use the tech in several scenarios; mobile app, integrated button in salesforce, or on the front-end website. It is basically the same content and tech just being surfaced differently depending on the need. This means you can spend less on ad hoc legal advice, get better efficiency from legal and compliance and lower risk tolerance, and generate better quality business. What’s not to like?” Blanchard concludes.