Advisors' No. 1 concern has shifted from complying with the Securities and Exchange Commission's new Marketing Rule to off-channel communications surveillance, according to a just-released 2024 Investment Management Compliance Testing Survey, released by the Investment Adviser Association, ACA Group and Yuter Compliance Consulting.
When asked to choose three top compliance topics among 50, the survey found that the "hottest" compliance topic for 2023, identified by 59% of the 595 survey respondents, was electronic communications surveillance/off-channel communications.
Indeed, in a recently released Global Relay survey of financial services firms, 65% of respondents said that getting employees to comply with rules for off-channel communication was their biggest compliance challenge.
The SEC has fined financial firms more than $3 billion for employees' use of unapproved communication channels, like WhatsApp and text messages on personal phones, and more fines are expected to come.
On the list of hot topics, advertising/marketing came in a close second, cited by 57% of respondents, and AI/predictive analytics debuted in third place, with 46% of respondents including this on their list.
The top areas of increased compliance testing include:
- Electronic communication surveillance/off-channel communications (73%)
- Advertising/marketing (65%)
- Cybersecurity (57%)
- Vendor due diligence (44%)
- Books and records (36%)
Other hot topics generally aligned with the SEC's exam, enforcement and rulemaking priorities, according to the survey findings.
