Page 50 - Investment Advisor June 2021

THE COMPLIANCE COACH

By Thomas D. Giachetti

How Will the Pandemic Change Regulation?

Actions taken over the past year may mean big future shifts, including a

reduction in compliance costs.

t started with fear unlike the mar- What might the future hold for reg-
kets had ever experienced — a pan- ulatory examinations? They become
Idemic threatening life as we knew more streamlined. There also may be
it. Advisory firms hunkered down, left the option for virtual vs. on-site exams,
their offices and opted to work remotely. especially once it’s realized that on-site
But they proved resilient, continuing to exams only increase regulatory budgets,
provide seamless services to a stressed time away from family and enhance
clientele, albeit with the assistance of exam anxiety.
some amazing technology. In addition is the realization that
We saw a massive correction in the many of the standard routine examina-
stock market only to be followed by his- tion issues have run their course, with
toric gains. What first looked like finan- regulators opting to direct their efforts
cial Armageddon turned to substantial tions with the assistance of technology. to examine and confirm the critical
gains for both investors and advisory What have we learned personally? We issues (i.e., is the money where it is sup-
firms alike. Although the pandemic is can adapt. Good employees can excel in posed to be, are firms proving services
not over, with firms gradually returning the office or remotely; and despite the reasonably consistent with their Forms
to the office, it appears that the worst is tragedy of the pandemic, life goes on. ADV, and are they maintaining client
behind us. And what have we learned profes- information in a secure and confiden-
I have been a road warrior for more sionally? tial manner). This can be accomplished
than 30 years, traveling the country to • With the advent of some amazing more effectively and efficiently on a
meet with and prepare advisory firms technology, advisors, their lawyers remote basis.
for regulatory examinations. Travel and consultants and their regula- But, alas, this changing world — and
stopped, and even when it started to tors, can discharge their obligations ways to do business and regulate from
resume, firms were (and some rightfully from home or the office; afar — brings up other questions. What
remain) hesitant. I took my first flight • Regulators don’t need to physically about human interaction and the daily
the last week of April to visit clients in visit offices to conduct thorough mix of being within an office — or
Texas. I now have booked flights for examinations. To the contrary, per- will offices become smaller, perhaps
almost every remaining week in 2021. haps their ability to more effectively shrinking advisory firm overhead? Will
However, prior to this week, I sat in and efficiently do so is enhanced by we permit employees to continue to
my recliner chair conducting those same the virtual examination format: work remotely? And when a valued
meetings, albeit differently, with the a. Request and exchange documen- employee needs to relocate, might
assistance of technology. My dry clean- tation electronically; we opt for retaining that employee
ing bill became virtually non-existent. b. Conduct interviews using one of remotely vs. having to find, and train,
I spent more time with my wife than I several vendors; a replacement?
have during the past 30 years; for that, c. Maintain electronic records of The world has certainly changed.
I was and am grateful. Although a travel all exchanged information/docu- It will be interesting to revisit these
veteran, it was hard for me to leave on mentation; issues one year from now.
Monday for the airport (I don’t know if d. Conduct exit meetings; and,
my wife shared my emotions). e. Send/respond to an exam find- Thomas D. Giachetti is chairman of the
Through it all, regulators did not miss ings letter (perhaps, for those Investment Management and Securities
a beat. They continued examining advi- well prepared, no responses will Practice Group of Stark & Stark. He can be Adobe Stock
sory firms, opting for remote examina- be necessary). reached at [email protected].

48 INVESTMENT ADVISOR JUNE 2021 | ThinkAdvisor.com