Over the next three years, our industry will face major questions that could significantly reshape its regulatory framework, including how to effectively harmonize oversight between RIAs and broker-dealers, and how to continually adapt to ongoing technological and demographic change.

At the same time, we will also have a chance to move our regulatory structure in a direction that works better for everyone, from firms and advisors to end clients. Industry leaders like the Financial Services Institute (FSI) are providing vital input to the SEC on its proposed best interest standard of care, while Finra CEO Robert Cook’s Finra360 initiative is improving our key regulator’s transparency, efficiency and communication with members.

Whether we make the most of these opportunities depends on our ability to continue to strengthen our working relationship with regulators, especially Finra. And one of the most effective ways to achieve that goal is to choose industry representatives for the Finra Board of Governors who understand how to serve as effective agents of change on behalf of our industry.

I’d like to share with you what I’ve learned in my three years as the Mid-Size Firm representative on the Finra Board about creating positive change. These insights helped me implement critical reforms such as streamlining the Finra exam process; improving transparency by communicating Finra’s priorities and disclosing its budget; and establishing the new Small Firm Helpline, among many others. I believe these principles will be vital to our continued success in working with Finra over the next three years, as well.

Effecting Positive Change By Building Consensus

With the support of my fellow firm leaders across the country, I was elected to the Mid-Size Firm seat on the Finra Board in 2015 with a clear mandate for reform. The voters sent a powerful message in that election that they wanted greater transparency, efficiency and communication from their regulator. From day one of my time on the Board, I have maintained an unrelenting focus on that mission.

If there is one lesson I’ve learned over 20 years of working with advisors to solve problems for their clients, though, it’s that tackling complex challenges means taking the time to understand the views and needs of everyone involved.

With that in mind, my first step when I arrived on the Board was to listen. I got to know my fellow Board members and their needs and priorities, and I proactively searched for opportunities to support initiatives that would serve my constituents’ goals while advancing Finra’s mission to protect investors and maintain the integrity of the markets.

This approach helped me build both credibility and an in-depth understanding of the various issues that were under consideration by the Board. When I saw an opportunity to get involved in streamlining the Finra exam process, I was able to decisively help move that proposal toward approval and implementation. I was also able to influence the proposal’s key priorities, including reducing member firms’ time spent on exams and sharing Finra’s general exam findings.

Never Lose Touch With Your Constituents—Or Their Needs

Being part of the Finra Board provides the forum to represent the constituents who sent you there. Over the course of a three-year term, those constituents’ needs and views will evolve, so staying in close contact with them is not just important, it’s a prerequisite to ensure their views are represented on the Board accurately.

Over the course of my first term, I logged thousands of air miles attending dozens of national and regional industry events to make sure I understood how mid-size firms felt about various rule proposals and initiatives. I also maintained a consistent open-door policy and encouraged mid-size firm members to reach out to me if they had concerns or ideas.

And, of course, my daily conversations with the more than 400 advisors we support at Kovack Securities provided a vital source of perspective, as well.

These efforts to stay in touch with my constituents and continually seek their input on the shifting regulatory issues facing small and mid-size firms played a major role in my work in helping to establish Finra’s Small Firm Helpline. This resource has provided an additional layer of guidance to firms with fewer resources, allowing them to more easily adapt to new regulatory requirements.

Conclusion

The next three years will be crucial in shaping our regulatory framework for the next decade and beyond. To help Finra become the most effective regulator possible, we must continue to support Robert Cook’s Finra360 initiative and strive to further strengthen the collaborative dialogue between the regulator and its member firms.

Achieving these goals will require industry representatives on the Finra Board of Governors who possess a laser focus on the needs of the people and firms they represent, and who will also work diligently to cultivate strong relationships with other Board members in order to effectively steer new proposals from idea to implementation.

Brian Kovack, Esq., is the president and co-founder of Kovack Securities, a privately owned, national full-service independent broker-dealer based in Fort Lauderdale, Fla. He is currently seeking re-election to the Mid-Size Firm seat on the Finra Board of Governors. For more information, please see www.kovack4bog.com.