According to a recent survey of industry compliance leaders, the Securities and Exchange Commission's (SEC) aggressive regulatory agenda is causing more firms to add compliance staff in the new year.
42% of the survey respondents indicated an expected increase in compliance staff in the next year. According to WealthManagement.com, this is a significant shift in the compliance world.
The survey was released several weeks after the SEC's marketing rule, which details when and how advisors can use testimonials and endorsements in advertising and what performance metrics are allowed in marketing materials. Sources opine that firms view spending more money on compliance now as a clear trade-off to avoid the risk of a fine, the costs of updating compliance after an enforcement action, and having to hire an outside compliance consultant.
Additionally, firms are grappling with the effects of the aggressive wave of new regulations and proposed rules from the SEC. In fact, many compliance teams cannot manage regulatory shifts efficiently. That leads to a situation where firms are scrambling to perform a risk-based analysis of where they can afford to free up resources in the interim quickly so that they can address the significant risk issues at the time.
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