Interpretation of the new requirements was also a challenge. In particular, areas such as how “significant” a product change should be to be counted and monitored. Because there wasn’t a clear-cut definition, there was no requirement that firms could simply adopt. Instead, they had to really navigate and critically think through how to define “significant” in the context of their firm, because there isn’t a one-size-fits-all approach.
WP: What are some technological or process pitfalls that could be putting pressure on advisors now?
BT: Now that implementation is over, and we are past Day 1, the focus is on sustainability and finding this happy place where the requirements are being met in a way that is not an operational burden to both advisors and those in supervisory roles.
We’re seeing some firms using manual processes and controls to meet the requirements. While that doesn’t necessarily mean they’re not compliant, it certainly increases the risk of human error and results in a control environment that is at a higher risk of operational deficiencies.
Certain firms may also view CFR training as a one-time activity done with implementation, stopping once Day 1 had passed, rather than a continuous need to be addressed over time. There’s also the risk of viewing the CFRs as a check-the-box exercise, when the new level of rigor introduced can unlock value for reasons beyond pure compliance – by using the data from analysing one’s product shelf competitiveness to better understand the market, for example.
