Off-Channel Communications Now Advisors' Top Compliance Concern

These key focus areas included:

37% cybersecurity
16% private funds
10% conflicts of interest
8% vendor due diligence
8% environmental, social, and governance
6% anti-money laundering and
6% books and records

“The increasing focus on off-channel communications underscores the need for robust electronic surveillance strategies to mitigate risks and safeguard client data,” ACA’s Global Advisory Leader Carlo di Florio said in a statement. “Marketing, artificial intelligence (AI), cyber, and vendor oversight are other key hot topics investment advisers are testing and grappling with. Investment advisers who prioritize compliance, conduct mock exams, and embrace industry best practices are better positioned to navigate the complexities of today’s regulatory environment.”

Notable Findings

The 2024 survey, conducted online throughout May, also found that the industry is focused on SEC exams, with 83% of respondents reporting that they are undergoing an exam or have been examined in the past five years.

The top examiner focus areas on recent SEC exams were reported as: books and records (58%); advertising and marketing (57%); and conflicts of interest (50%).

Investment advisors are enhancing their compliance programs, with 65% having conducted or intending to conduct a mock SEC exam, for example, as well as increased testing, the survey reports.

“A significant portion of respondents (85%) reported that a mock exam prepared them for an actual SEC exam and identified issues and best practice enhancements,” according to the survey.