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Changing regulations are an ever-increasing challenge for financial services organizations. In fact, regulatory changes are now happening at a rate that is three times what it was in 2011. Unfortunately, when legacy CCM systems are in place to manage regulated customer communications, organizations must rely on repetitive manual updates to incorporate the changes and ensure compliance.

In June of 2019, the US Securities and Exchange Commission (SEC) adopted a new regulation specific to wealth management firms. The Regulation Best Interest requires investment advisors and broker-dealers to act in the best interest of retail customers when recommending an investment strategy or securities transaction. A key element of the regulation is the disclosure obligation. Each time a financial services company offers a customer a product, it must disclose specific details relating to fees, interest rates, purchase options and minimum balance requirements, as well as potential risks.

These disclosures must be clear and consistent throughout the purchase process, across every communication regardless of channel, from a printed mailer to an email, a website, even a phone call. The Form Client Relationship Summary (Form CRS) contains such disclosures, as well as details regarding advisor duties and the nature of the relationship between the advisors and retail customers. The potential for errors and omissions goes up when manual updates need to be made multiple times across different touchpoints in different systems for print, email and online materials. Recently, one of the largest banks in Canada was fined $200,000 for failing to make proper disclosures. While that amount may not sound large for a big bank, the remediation activities such as re-mailing and call center costs, as well as the risk presented to the bank’s brand, was significant.

With situations like this in the news, when the head of compliance at a leading U.S. wealth management firm learned about the Regulation Best Interest, he immediately expressed concern about the firm’s ability to adapt processes and materials to meet the deadline. In particular, the Form CRS would need to be added to all their customer communications, across all channels. With regulators watching closely, he fully understood that failing to meet the deadline would increase their risk of violations, fines and costly remediation events.

This firm’s customer communications management system was homegrown and had been cobbled together over years of use. It was fragmented and each communication channel — print and digital — was a separate and distinct system. This meant applying the new disclosure requirements would be a complex task with different teams each updating content for their designated channel. Additionally, having to rely on disparate systems managed by different teams would slow the process and increase the risk of error. It was no surprise when he concluded that the system and the process they used to manage customer communications was not up to the task. This company, like many others facing these changing disclosure requirements, needed a better way.

And there is a better way. Today, more and more companies are recognizing the inherent benefits of modernizing their processes and systems with a centralized content hub that simplifies disclosure management and communications generation through sophisticated cross-channel, cross-touchpoint content sharing and targeting rules. These kinds of systems streamline processes to remove repetitive manual updates, reducing change cycles from months down to days and increasing accuracy by providing a single point of change. Across the servicing or marketing team, efficiencies can also be generated by eliminating the need to have multiple teams manually update hundreds of individual web pages, emails, letters and promotions.

For an initiative like this to be successful, we have found that following these four tips will accelerate the management of regulatory disclosures and reduce its burden on marketing, operations, IT and customer communications teams:

1. Eliminate the replication of disclosure content across disparate systems that deliver content to web pages, email distribution systems and printed materials. Instead, abstract the content layer from your delivery and print production systems with a central content hub. This eliminates both the risk of errors and inconsistencies across channels while also eliminating redundant updates, providing greater control over disclosure content.

2. To reduce redundancy and duplicate content management efforts, choose a system that enables cross-communication and cross-channel content sharing. By implementing a platform that manages disclosure content as shared objects, applying authorized changes to relevant communications in your various product lines, geographies and communication channels happens automatically and instantly. The ability to create a single point of change reduces costs and effort dramatically.

3. Look for ways to cut out additional steps and groups in the update process. Many organizations rely on third-party service providers or have to manage content changes through the IT department, which unnecessarily lengthens change cycles. Look for a solution that gives your business users direct control over authoring and editing disclosures and communications, so they can quickly make required changes.

4. Create a workflow approval process that is customizable to match your business process and allows the necessary stakeholders to approve and proof content changes. This eliminates delays associated with email chains of PDF proofs.

The need to comply with stricter regulatory oversight of disclosures will only grow over time. We have seen content sharing alone reduce 70 percent of the steps required to change disclosures and slash the time required from months to less than one day. Streamlining your disclosure processes is not only essential to reducing risk, it also enables you to have the agility necessary to compete in this ever-changing, highly challenging environment.

Patrick Kehoe is Executive Vice President of Product Management for Messagepoint, Inc. Kehoe has more than 25 years of experience delivering business solutions for document processing, customer communications and content management.


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