5 Simple Tips to Operate in Our Regulated Industry

by Mark Stewart

It can seem too much. Maybe sometimes you feel like you need a full-time employee to comply to every regulation. The stranglehold can be daunting.

We get it.

That grey cloud that glooms over your advising business on occasion doesn’t have to be there. Or, at the very least, it can be less grey, and less gloomy.

Operating in a heavily regulated environment is no walk in the park. But with the right research, preparation, and strategy—you can operate your business smoothly and successfully. Be sure to use these five actionable tips to continue to build your business in today’s regulatory climate.

  1. Truly understand what the DOL fiduciary rule entails–regardless of when it’s implemented.

The rule is meant to develop more trust between consumers and financial advisors by making sure all conduct is done with the consumer’s best interest first.

This “best interest standard” means that all financial advice should focus on income needs, financial circumstances, investment objectives, and risk tolerances of the investor—without regards to a firm’s or financial professional’s compensation.

Concisely, a financial professional must be sure that the compensations for any product is comparable to going market rates of other products with similar features. For example, if a product has unusually high commission payouts and is similar to other products with lower payout rates, regulators may decide to take a closer look.

While we’re now to believe the entire DOL fiduciary rule isn’t going into effect until 2019, the gist of the saga is this: we don’t really know when it’ll be fully implemented. That being said, it’s best to prepare yourself by learning and understanding the rule. You’ll be happy that you’ve prepared when it does come into effect.

  1. Learn how to prepare for challenges in the future.

This just in: the financial services industry is constantly altering. From regulations to marketing, products to policies—it’s important to stay on top of the changes.

For example, the DOL fiduciary rule is a perfect way to take a holistic reflection on your business and make sure that you’re ready for the challenges of today and tomorrow. You can add more trust into your processes so your clients always know that their interests are put first. Remember—there is nothing more important than trust in this industry, so take time to prepare your business the right way.

  1. Build a solid, agile team.

As the industry gets more regulated, there’s obviously going to be more limitations and constraints to what your can do as a business. Focusing on building a solid team that stays on top of changes is key to progress and innovation in a regulated environment. You want to surround yourself with employees that hold a vast amount of skills and varying experiences to help counteract any shortfallings you may have in the company. The more skills packed into one employee, the better. That means to find the office manager that is proficient in social media, or the marketing pro who also understands insurance underwriting.

The right mix of people—with the right skills—make for a passionate group of employees who love what they do and why they do it. That should equal success for your business.

  1. Strategize to reveal the right solutions for you.

This is an easy one, but it can sometimes get lost in the craziness that is running your own business. In a regulated industry, you should be strategizing what you want to be doing in the next three months, six months, and the next year.

Having multiple business plans made for the foreseeable future allows you to be flexible with the changes in the industry, and allows you to make easier adjustments along the way. The idea is to be lean and agile; so don’t get too entrenched with a single strategy.

Instead, come up with different strategies for different circumstances. That way, you’re never caught off-guard. It may seem daunting at first, but you will thank yourself when you realize you need to make a change to stay current with the regulations.

  1. Let compliance be your friend.

Compliance can get a bad reputation. Sure, it isn’t the most glamorous part of your business, but it sure is one of the most important. If you’re lucky enough to have someone that knows compliance well, be sure to always have them look over your business’ content so you know you’re on the straight and narrow (like we do). It’s worth the time and effort and will keep your business away from any possible legal action.

If you don’t have a compliance officer or staff member, you can try to find someone either online or in your community that would be willing to look over your work. You may also consider joining industry-specific networking groups as these can provide good sources of information on how others approach compliance. However, if you believe you can do it yourself, go for it! Just be sure that you know the ins and outs of the industry, and what is needed to be said to comply.

There you have it. Be sure to utilize these tips for our ever-shifting industry environment. The DOL fiduciary rule will continue to shift how financial professionals engage in business, but by taking the proper steps now, you will be saving yourself a lot of time, headaches, and stress when the changes do come.

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