[Gone are the days of thinking of technology as something that comes in a box with instructions or as merely a tactical decision that adds a bell or a whistle or just provides an efficiency shortcut to your service offering. In our new operating environment driven by an accelerating rate of change, technology needs to become a central core component to your firm’s strategy; central to who you are and what you represent. That is because technology will continue to feed on itself and evolve exponentially. The only way to keep up to remain relevant and competitive is to learn how to partner with it.

But, how exactly does a financial services firm partner with technology? By definition, a strategic commitment always demands a large investment of time to build a depth of connection and an active working relationship to arrive at that partnership level. By studying early successful examples in the development of advisor–FinTech partnerships, we see a focus on openly collaborating, continuously iterating, and learning together. Firstly, this leads to not just innovative technology for its sake, but purposely directing it to its most maximal use to solve key problems and goals. Secondly, this type of strategic relationship is not only for well-honed solutions for today’s pain points, but also a working partnership to be ready to explore ongoing and future problems and challenges. This is a new vital survival skill that needs to be developed to differentiate your firm as a leader in the evolving financial services arena.

The Institute of Innovation Development is continuing to explore and report findings on this important topic by interviewing both FinTech firms and financial services firms to better understand and learn from current partnerships being developed. We recently reached out to Institute member Bo Howell, CEO of Joot (formerly CCO Technology)—a FinTech software-as-a-service company focused on supporting small and middle-sized advisory firms with regulatory compliance—to get his practical experience from the trenches of these burgeoning industry relationships.]

Bill Hortz: From your working experience and perspective, where are we are in the adoption of FinTech solutions in compliance?

Bo Howell: We see that many small and middle-sized advisors are still cautious about using technology in regulatory compliance because they are worried that a failure in the system can cause damage that far outweighs the benefits of the system. The operational efficiencies gained by software can quickly be eliminated by a regulatory failure that results in an SEC or other regulatory sanction.

We understand their concerns because we walk in their shoes. We serve as CCOs and compliance consultants for many advisors and we are deeply aware of the risks and complexity of regulatory compliance. Unlike some vendors that are pushing FinTech, we are not merely technologists, we are subject matter experts that use technology to make regulatory compliance easier, safer, and cheaper.  We are 100% focused on the working partnership between compliance and technology.

Hortz: What other roadblocks do you see that are preventing advisors from considering FinTech in the compliance space?

Howell: Too many advisors think of compliance as simply the cost of doing business. It has a negative connotation. Advisors know that a compliance violation can hurt their business, but they don’t appreciate how it can help their business. It can support back office operations by driving greater efficiency and handling repetitive, time-consuming tasks. This means people can focus on higher skilled activities that require judgment, exception handling, and high touch. Good technology can also free up your people to focus on revenue-generating projects. In other words, finding the right technology solutions for compliance can indirectly grow an advisor’s business.

Another reason that advisors don’t focus more on compliance is because it’s a proxy for the SEC and government regulation. When advisors think of compliance, they see government-created speed bumps and roadblocks. As business owners, advisors hate red-tape and they certainly don’t want to embrace it.

As a result, they commit just enough resources to maintain compliance. As I noted earlier, we want Advisors to realize that compliance, like every other part of their business is essential and can benefit from technology. We want to change the negative perspective on compliance. We view compliance as a method for ensuring the safety and stability of the business and client assets. A good compliance program acts as an insurance policy for advisors and their clients. It can also increase the trust that clients and employees have in the advisor.

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