Best practices: How financial planners make remote work work

May 19, 2023 5:58 PM

"All things remote inspections, return to the office and the definition of branch offices."

Those are the three topics that Kayte Toczylowski, the vice president of member relations and education at the brokerage industry's regulator, said "come up in pretty much every meeting I have with member firms." Her words came during an interview with Financial Industry Regulatory Authority CEO Robert Cook on the second day of FINRA's annual conference this week in Washington D.C.

But work-from-home questions in wealth management don't apply only to the nearly 3,400 brokerage firms that FINRA oversees directly. Remote work issues remain subjects of intense interest for people of all stripes in the wealth management industry, including more than 35,000 investment advisors registered with the SEC.

Scoop, a company that helps business clients with remote work arrangements, reported this month that only 20% of financial services firms require their employees to be in the office every work day. The survey, conducted through a poll of 251 industry firms, found that 41% of respondents allow their employees to spend some of their work time away from the office. That's despite headline-grabbing pushes by industry giants like JPMorgan Chase to insist employees start coming back in.

'I don't know how much better your life can be'
For many financial planners, the new ability to work from home brought on by COVID-19 marked a welcome change from their grinding routines. Chris Ward, the founder of EntryPoint Wealth Management in Edgewood, Kentucky, said that before the pandemic, he spent at least an hour every day commuting to and from his former employer in nearby Cincinnati, a financial services firm he declined to name. When traffic was bad, the drive could take an hour and a half.

He left that job in 2020 to form EntryPoint, which he runs out of an attached garage at his home. Ward said the change has allowed him to work when he feels most energetic and productive — often 7 a.m. to noon instead of the usual 9 to 5. He has an agreement with a separate office whose address he can use for mailing and marketing purposes.

Many of his clients, who tend to be older, still prefer to meet in person. So he'll arrange to sit down in a local coffee shop. Ward said he can't really see any drawbacks to his new work arrangements.

"I don't know how much better your life can be," he said. "I wish this is something I was inclined to pursue sooner rather than later."

As entrenched as hybrid and fully remote schedules may now be in the wealth management industry, nothing comes without a tradeoff. From possible alienation from clients to compliance headaches, employment at a distance has its own pitfalls.

Here are some tips and practices that other industry representatives and experts have adopted in the past three years to make remote work work for them:

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Reach out, touch someone

Nicole DellaPasqua, a certified financial planner at Crestwood Advisors in Boston, said there's little doubt that remote work has made it easier to schedule meetings.

"You are talking to clients more frequently now because you are able to jump on a Zoom call as opposed to having to drive to Rhode island to meet with someone," DellaPasqua said.

If there's any loss, it's likely in the sense of personal connection advisors usually try to establish.

"I have clients I have never met in person," she added "It's harder to gauge emotions and read someone on a screen. So there are pros and cons."

Both DellaPasqua and her fellow certified financial planner, Adam Pawloski of Telemus Capital in Southfield, Michigan, said there are ways to mitigate the remoteness of remote work. Pawloski agreed that it's far easier nowadays to schedule appointments throughout the day.

"Some clients used to say, 'I can only meet you at 6, after my job is done and I have my kids home from school,''" Pawloski said. "But now we can video conference with them almost anywhere they're at. We have a lot more engagement because of Zoom culture."

As for maintaining a personal connection, Pawloski recommended paying extra attention to clients' body language and behavior. Don't, he said, get so wrapped in your notes or a presentation that you forget to observe what the person on the other side of a video conference screen is doing.

Zoom and similar services in essence give clients a means of welcoming you into their homes. If they're comfortable turning their computer camera on and not obscuring the background, you might notice something — a piece of art, for instance — that leads to a conversation that would be unlikely to unfold in a formal office setting.

"It's really about figuring out how to turn it into a strength," Pawloski said.

After experiencing periods of total remote work, both DellaPasqua and Pawloski are now back in the office for at least part of the week. There's no denying, they said, that there are advantages to working in person with others in an office setting. But DellaPasqua and Pawloski said they'd have a hard time now walking away entirely from their hybrid schedules.

"It's nice to have some sort of office presence and culture," DellaPasqua said. "On the other hand, the pandemic taught us we can bring our work with us pretty much wherever we want."

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The regulator will see you now

Of course, things aren't quite that simple. Ever since the pandemic hit in March 2020, regulators have struggled to find ways to ensure that investors are just as protected under the new work arrangements as they were before.

FINRA's struggles with two proposed remote work policies show how hard it is to strike the right balance. One proposal, which would allow firms to conduct internal inspections of supervisors' residential offices once every three years instead of the current annual requirement, was resubmitted for public comment in April following small revisions. One week later, FINRA did the same with a separate proposal that would allow firms to test out remote inspections of their branch offices.

Even with those two regulations in limbo, brokers and advisors have plenty to keep them busy if they want to stay out of trouble. Douglas Kamin, the managing director at compliance consultant ACA Group, said firms should start by making sure they have specific people who are assigned the responsibility of supervising remote employees. The next step then, he said, is to have their policies and procedures put in writing.

"In any disciplinary measure, the SEC always charges 'failure to have adequate policies and procedures,'" Kamin said. "From an SEC perspective, if you have written policies and procedures, you at least have a checklist that says, 'Do this and do that.'"

It's not enough simply to check boxes on such a list. Yet, Kamin said, if firms don't take time to put their policies and procedures in writing, regulators may have a hard time believing they have them at all.

Kamin said all firms should make it mandatory that any subpoenas or similar legal documents sent to a remote broker or advisor be forwarded to the central office. Similarly, firms should have prohibitions on representatives holding onto client mail.

Kamin also recommended having a contingency plan that spells out what happens if a remote office is rendered unusable by a natural disaster or other unpredictable event.

"If you are not able to work from home, what are you going to do?" he said.

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Tech to the rescue?

Of course, remote work would hardly be possible without the technical innovations of the past three decades. Like most compliance experts, Kamin said firms should exercise strict control over the computer systems and other hardware they use for business purposes in their homes and other remote offices.

Beyond the usual steps of insisting that computers have virus scans and other protections against malware and that employees use strong passwords to access client data, Kamin said firms should monitor representatives' communications closely. Since work-related email usually goes through a firm's central systems, it's fairly easy to keep tabs on.

Somewhat harder to monitor are postings on social media or chats on messenger services like WhatsApp. But they can be just as eye-opening, Kamin said.

"It can help uncover anything from customer complaints to outside business activities," he said.

Jennifer Szaro, the chief compliance officer at brokerage XML Securities in Falls Church, Virginia, said technology has a big role to play in firms' internal examinations of remote offices. Those who doubt that cell phones and similar devices can be adequate substitutes for in-person compliance officers need look no further than they're now used by fire inspectors, she said.

"They are examining some of our most critical buildings and infrastructure with smartphones and tablets," Szaro said. "We need to look at them and ask, 'How are they doing that?'"

Szaro said supervisors in the financial services industry can easily ask remote employees to turn on their phones and sweep their home offices. If the examiner notices anything that might raise questions — a stack of papers on a desk, say — he can ask the employee to hold it up for closer scrutiny.

Supervisors can take screenshots of documents held up to a phone and save them to be reviewed in detail later. And it's not as though nervous fidgeting or other suspect behavior escapes the camera's eye.

"You can still tell if someone's being dodgy," Szaro said. "You can still say, 'OK, guess what, I noticed that.'"