blog from Appway

Compliance: Restrictive or revolutionary?

By Alessandro Tortelli, Solution Practice Lead, Appway

Share this resource

Guiding digital transformation at institutions worldwide

View Solution Provider Profile

Connect with Appway


Regulatory Reviews for Wealth

Regulatory Reviews for Wealth enables a data-driven orchestration of the compliance process that provides a holistic overview of clients. Regulatory reviews are expedited due to data centralization and the monitoring of internal tasks, which are assigned according to priorities. Compliance experts can design the review process and meet deadlines with the...

view solution
by Appway
| 28/03/2019 12:00:00

Compliance this and compliance that. Compliance is a term that we hear about a lot in the wealth management arena. Regulators are pushing for transparency—FATCA, MiFIDII, and GDPR are perfect examples of this—now more than ever before

This obsession with compliance and transparency hasn’t come about suddenly. The shift is partly due to regulators seeing a need for more legal constraints and boundaries, as well as a wish to avoid another debilitating financial crisis. All of these are valid enough reasons, but they’re not regulators’ only motivation.

Surprising as it may sound, regulators and their infamous regulations are also driving technological innovation. One example of this is with MiFIDII, which requires the continuous education of advisors: “[…] firms should allow their staff sufficient time and resources to achieve that knowledge and competence and to apply it in providing services to clients”. In response, financial institutions are having to create new business models that include support for the new requirements.

To the outside world, it’s clear that regulators are making the full value chain more transparent, and this has been embraced by the latest generation of clients who are happy to have more access to and awareness of their finances.

However, regulators are also doing a lot behind the scenes to drive change, such as with data and AI-driven background searches, regulator APIs, KYC facilities, RegHubs, or outsourcing and managed services. This is to ensure the industry doesn’t get left in the dust by modern clients.

When it comes to the US, the biggest topic within wealth management is still fiduciary. Some of the questions being raised around this are:

  • What should it mean?

  • Who should be held to a certain standard?

  • If not that standard, then what should they be held to?

  • Who should drive this regulation?

Because this has been a complicated and divisive issue, we’re now seeing individual states enact their own rules. Nevada, New Jersey, and Maryland have all taken steps to enact their own rules to gold advisors to a fiduciary standard of care. This leads to fragmentation of regulations, whereas creating a national standard would be much more efficient.

Whether it’s the type of service models you’re required to deliver to a specific type of client based on fiduciary or best interest standards or the privacy standards impacting a financial institution’s ability to gather data during the onboarding and prospecting phase (such as the California Consumer Privacy Act), these trends impact the client journey as well as any interactions with that client.

The most successful banks will be those that are effectively transparent with clients. Banks should define a business model that provides clients with all the tools and information needed to support their financial decisions, and they must be open about costs and potential risks. Investors will happily pay for this type of educated advice.

For more insights on this and other trends, check out our webinar recording, Top Wealth Management Onboarding Trends 2019

See original blog: