Time to Get Used to Hybrid Work

Lessons From FSI OneVoice

August 05, 2021by Robert Cruz

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Happy to report that I’ve just returned from my first in-person industry conference in over 16 months. The event, FSI OneVoice, was truly a hybrid affair with attendees and participants given the option of partaking onsite in Orlando or via Zoom. Perhaps a perfect foreshadowing of the issues we were about to cover.

No small feat, it was a well-executed event. Conference organizers did a tremendous job of ensuring that a comparable experience was offered virtually and on-site. But some elements were out of their control. For example, the inevitably weird experience of being part of a large gathering for the first time — in a long time — for those on-site. Who knew the lack of mute buttons, barking dogs and on-screen mishaps would be so strange?

That weirdness seemed to be widely felt, even as many of us were in a familiar setting and looking forward to connecting in person. When one presenter proclaimed that “business travel is back!” the audience visibly cringed. When returning to your hotel room to news reports of Delta variant outbreaks in the city where you’re currently located, even cringier…

How new developments in the pandemic will impact our return to the office setting is unclear. But many companies have already started moving in that direction, even as they grapple with the disconnect between executives seeking a return to the office, and the overwhelming percentage of employees pushing for remote work. According to PwC, 69% of financial services firms expect more than half of their staff to work from home at least once a week. What’s more likely is the need to accommodate both. WFH  step aside for WFA (work from anywhere), or maybe WFH’s not-quite-so-noncommittal cousin, WFCB (work from close by).

Transform to digital, or be left behind

Somewhat surprisingly, a conference comprised primarily of pragmatic investment advisors and compliance professionals shared a mostly positive view of their ability to get things done despite the circumstances of the past year and a half. Many panelists commented on productivity improvements using tools like Zoom and Microsoft Teams. They saw this as the catalyst for adopting a digital-first strategy to meet client needs through new channels.

Keynote speaker, economic futurist and former executive of the CFTC Andy Busch went further, noting that the response to the pandemic was an indicator of resilience, enabling firms to better respond to regulatory change, demographic changes, and the increased proliferation of fintech. This, he noted, will allow firms to better pursue growth opportunities in social and retail investing, AI and blockchain, and new financial products such as cryptocurrency.

When polled, 63% of the audience indicated that they see retail investing as the biggest opportunity heading into 2022. They were, however, skeptical about crypto (apparently, it would be difficult to document alternative investment recommendations to Dogecoin without raising a RegBI flag. Who would know that DOGE was not in the best interest of the client?).

The impact of hybrid work on supervision and exams

In a discussion focused on communications and oversight, my fellow panelists and I took the hybrid work topic further. Regarding preparation for a hybrid workforce, audience respondents noted their primary concerns:

  • Use of unapproved tools like TikTok and WeChat (38%)
  • Lack of visibility of remote staff (25%)
  • New social media features (e.g., interactive, multiple features, default settings, etc.) (25%)
  • Readiness for virtual branch inspections (8%)

Panelists noted that they had successfully migrated to Teams, Zoom and similar technologies, although their employees continue to remain consumed by requests for new tools. When considering communications tools demanded by clients and productivity tools pushed on advisors by vendors, requests continue to arrive almost daily. Those requests are creating a significant strain on third-party vendor risk management staff and processes.

Comments and questions from the live and virtual audiences shared this concern, both for supporting top social platforms (LinkedIn, Twitter, Facebook), as well as demands from new clients to use TikTok and Instagram. These demands are being heard across the market. Paraphrasing a prescient statement by one former RIA who now markets their advisory service via TikTok, “18-year-old investors will watch me, not Jim Cramer.”

What to consider when adopting new communications channels

As we discussed mitigation strategies and best practices, the panelists noted several areas where they have prepared for the next normal, including:

Hardened governance processes. Firms have learned from prior mishaps of IT rollout of tools before they’ve been properly vetted for risk. Whether as a dedicated process, or a multiple-person committee, financial organizations should involve direct engagement and collaboration with legal, security, compliance, and privacy teams to adequately assess risk for each new tool.

Feature-level due diligence. Panelists discussed how important it is for compliance professionals and teams to understand the capabilities of new tools. This is especially critical given the lack of prescriptive regulatory guidance. Compliance should be examining how new communications tools will be used, by whom, how frequently, and what alternatives exist.

Economic models are evolving. Several comments centered on how firms can manage the cost of evaluating, licensing, and supporting new platforms. While some have considered passing some portion of the cost on to the advisor, they’ve stopped short of considering client-pull for new tools or driving advisors to sketchy alternative tools (e.g., freeware).

Monitoring for prohibited tools intensifies. Lessons from Roaring Kitty and the SEC's emphasis on outside business activities were not lost on the panel. Suggestions included the modification of lexicons to look for prohibited networks, updated written supervisory procedures, as well the use of attestations from employees as measures to stay in front of this very visible topic.

The visibility gap continues. Financial firms remain focused on the loss of visibility into the activities of hybrid workers. Panelists advocated for:

  • Using gap analyses to identify areas that may be unintentionally biased toward in-person policy inspection
  • Codifying policy items that are unique to remote work
  • Awareness of the specific locations of remote staff, to meet branch location registration requirements in each state

Keeping up with the volume and variety of data. Financial firms are struggling to keep up with the volume and variety of communications content being generated every day. For many, adding supervisory staff is not an option, and the tuning of lexicons can get to a point of diminishing, marginal returns. The goal of becoming more efficient with technology will lead some toward artificial intelligence and machine learning solutions faster than originally planned.

Clearly, the phrase “back to normal” is as inaccurate as the notion of going “back to work.” Aside from the unknown fate of large in-person industry conferences, the virtual workplace has become the norm, at least for the foreseeable future. The advisor is the branch as the employee is the office, whether that means a physical or virtual presence or both. It’s time for firms to ensure that their compliance controls are equally effective in a future with WFH, WFA, or WFCB.

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Robert Cruz
Smarsh Blog

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