Staffing Options to Solve the DOL Compliance Challenge

Published by Shawn Gillespie, Director - Senior Account Executive, Business Development
February 21st, 2017

With April just around the bend, wealth management firms are diligently preparing to bring their organizations into compliance with the fiduciary rule. Though delays and changes to the law are possible, most organizations are rolling out their DOL compliance strategies on schedule to enhance their organizational efficiency and better protect their clients’ investments.

Attorneys and compliance officers in firms across the country have worked for months assessing the intricacies of the new law and designing strategies to accommodate them. As the implementation date draws near, they are handing off compliance plans to operations staff for transformative, challenging rollouts.

Implementing a DOL Compliance Strategy

As operations professionals examine their firms’ compliance requirements within the regulatory landscape, they must address two sets of resources that are central to executing their strategies. First, they need to identify the right tools to facilitate their compliance strategies and compare their needs with the solutions available both inside and outside their organization. When organizations lack particular tools, they need to determine if they can or should be purchased or built.

Next, firms look at roles they must fill to comply with the DOL rule. As they begin training advisors to implement their strategy, they sometimes find that they need to build out their operations staff to process all the paperwork involved in compliance. They need people to make documentation available in systems that advisors can access to perform their roles in compliance with the new regulations.

Challenges to Staffing Up

Staffing up for compliance can become complicated as many organizations discover that they are missing a lot of critical skillsets. When firms lack particular experts, they may need to explore partnerships to bring in people with the particular knowledge their strategy requires.

For instance, firms may need a compliance officer to address fiduciary standards that are new to their organization. Sometimes, firms need to add attorneys to round out their legal staff. Diversified firms may have some of these specialists on staff addressing other business lines. In such cases, these professionals may be able to shift focus to assist compliance with the DOL rule. While the additional professionals required to roll out a compliance plan can vary greatly from firm to firm, many organizations find themselves needing to outsource or hire.

Because the DOL regulation is new, there are very few experts dedicated to supporting this specific type of compliance. Additionally, as wealth management firms across the country work simultaneously to align their practices with the fiduciary standard on time, the demand for DOL compliance specialists is remarkably high.

These circumstances make staffing up both impractical and nearly impossible, yet organizations often scramble to hire without a feasible plan, costing them steeply. When firms realize they cannot possibly staff up adequately or sustainably within a reasonable budget, they begin to pursue alternatives. By this time, they may have spent considerable resources on fruitless efforts.

An Alternative to Staffing Up

Technology is the most viable alternative to staffing up. There are platforms available that were specifically designed to support compliance. Through workflow automation, they streamline operations and processes that are typically people-powered.

Today’s financial technology gives firms the power to accomplish more with fewer people than ever before. While the new regulations may prompt some erosion of advisors’ profits, advanced tools can help to diminish their losses by significantly improving operational efficiency. As the financial market evolves toward practices that promote protecting investors and improving firms’ efficiency, financial solutions are likely to become even more sophisticated so that they can continue to support those same goals.

Minimizing Compliance Stress

While the stricter DOL regulations set to take effect this spring are a stress-inducing headache for many wealth management firms, technology can alleviate some pressure. With its cost-saving capacity and ability to streamline complex compliance-related operations, technology tools help to ease some of the hassles and financial concerns associated with fiduciary compliance.

Contact First Rate today to see how technology can help align your practices with the new DOL regulations.

About the Author: Shawn Gillespie is an Account Executive at First Rate, Inc. and helps investment firms and advisors solve their toughest challenges with innovative technology solutions.

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