How I Found Inspiration in Financial Services Deregulation

Values are proven when demonstrated without a mandate to do so.

You won’t find a financial services institution that does not have a theme of customer, fairness or integrity woven into its core values. The current industry deregulation trend is a powerful opportunity for financial services firms to show and prove their values, and that they exist to benefit a variety of stakeholders, not just shareholders.

The Trump administration is making its penchant for slashing regulation abundantly clear, and a few recent actions center on sectors of the financial industry. The CFPB — the post-recession governing body established to protect consumers from unfavorable banking practices — is on the ropes. Dodd-Frank, the parent reg to the CFPB, is being pruned with Republican desires for a full repeal. The DOL Fiduciary Rule — the aspiring higher bar in investment advisory and its products — is on ice for the time-being.

One pillar of Dodd-Frank is the set of rules around liquidity reserving, their purpose being to prevent a repeat of the 2007–09 financial crisis. This blog won’t wade into the debate on whether that legislation is overburdensome. It’s the regs that impact consumers that are more straightforward. In this case, the industry’s values should be its governor, its self-regulation, even if federal regulators come knocking less frequently.

The industry seems to be taking a values-based step with the Fiduciary Rule. Despite the Rule’s current purgatory and the clunky rollout, major insurance carriers and wealth management entities are proceeding with implementing restructured products and selling standards anyway because it drives better advisory to consumers. Yes, the sunk cost of 2017 implementation in prep for DOL compliance as well as the SEC’s plans for its own Fiduciary Rule are no doubt implementation drivers, but overall, the industry is exhibiting a widespread agreement that consumers are due financial planning guidance and products that are in their best interest alone and not influenced by broker commissions.

As financial firms benefit from looser regs, let’s continue to pay it forward. Banks and insurers will reallocate some resources away from compliance and reporting and onto strategies that benefit the bottom line — and, let’s hope, the customers they serve as well. Firms have the opportunity to ingest the spirit of the aforementioned regs — if not their bureaucracy — and infuse them into products, incentives, people and processes for the customer’s benefit. Despite the industry’s uneven history, now is a time when financial services firms can widen their aperture to all stakeholders in their orbit and communities, not just shareholders who demand a quantitative return.

Is it a naive notion? Values-driven business is proven and growing, a movement of which Impact Makers is proud to be a part. So, to all financial services entities out there, let’s prove to the politicians that we operate above regulation, and prove to our stakeholders that the corporate value that espouses “customer” is equal to the value that espouses “performance.”

About the Author:

Adam Foldenauer, Financial Services Vertical Lead

With nearly 20 years of experience in financial services and IT consulting disciplines, Adam Foldenauer is a customer-focused account executive and trusted adviser to clients. As the Financial Services Vertical Lead at Impact Makers, Adam has a proven track record of delivering value to clients while managing and growing client relationships and markets. He is a results-driven leader of digital products, as well as strategic programs across the financial services value chain.