Compliance: The “Donald Trump Effect”

With a new president in the White House, it’s time to get a fix on what might be happening moving forward with respect to the future of compliance and compliance job opportunities. With this in mind, I interviewed corporate compliance and operations executives and personnel in the financial services (investment advisor firms, securities brokers and dealers, insurance, banks, hedge funds), healthcare, and education industries, the three largest employers by far of compliance professionals. I also spoke to regulators at several federal and state regulatory agencies.

To my surprise, my sources were unanimous in concluding that compliance still has a very bright future despite President Trump’s vow to dramatically cut back on business regulation. They saw no adverse impact on hiring. To the contrary, they said that compliance hiring is certain to be as robust as ever. An insurance executive told me that, once artificial intelligence has its way (see Volume 15, I Robot: Opportunities and Threats in an Orwellian World  in our 21st Century Legal Career Series, coming soon), “compliance professionals may be the only employees left at corporate headquarters.”

How can they possibly be so optimistic when President Trump has declared all-out war on regulation? Here’s how:

  1. The large number of regulators
  2. For example, major financial services companies must answer to the following compliance and enforcement authorities:

  • U.S. Department of Labor (re: ERISA-qualified plans)
  • Financial Industry Regulatory Authority
  • Municipal Securities Rulemaking Board
  • Consumer Financial Protection Bureau
  • State Insurance Departments/Commissions
  • State Banking Regulator
  • State Insurance Fraud Bureau
  • Internal Revenue Service
  • Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and/or Federal Reserve Board
  • Possibly also the Commodity Futures Trading Commission
  1. Complexity. At least with respect to these industries, their activities are incredibly complex and getting more so every year. Several examples tell the tale:

Healthcare is in the midst of a technology revolution exemplified by:

  • DaVinci surgical robots that can perform intricate operations with a dexterity beyond human capabilities;
  • long-distance surgery via robots controlled by off-site physicians;
  • robots that perform “grand rounds” in hospitals absent accompanying physicians;
  • anesthesia administered and adjusted by machines instead of anesthesiologists or nurse anesthetists; and
  • image-interpretation bots that can read and diagnose X-rays, CAT scans, and MRIs with a greater degree of precision than radiologists.

Financial services is now dominated by sophisticated software programs, such as:

  • financial analytics programs that can put together financial plans that perform better than the human, cobbled-together variety;
  • predictive analytics programs that forecast market trends;
  • deep learning programs that refine their client-friendly output as they absorb new and more nuanced information;
  • client advisory programs; and
  • automatic communication bots that keep clients informed of new developments and changes to their portfolios;

In addition, broker/dealer fiduciary standards of care vis-à-vis clients have been raised in recent years by the host of regulators that impact the industry. That has necessitated increased compliance hiring. For example, the Labor Department recently raised the standard of care required of sellers of qualified plans. Elevated standards are not likely to go away because the public (investor) demand for them is intense and universal.

Education, which has become a poster child for intense government scrutiny as a result of:

  • the 300+ regulatory mandates of the Higher Education Opportunity Act of 2008;
  • education delivery systems becoming “technologized,” due to the rise of distance education platforms and student bodies scattered around the country and abroad; and
  • globalization, which means more foreign students attending U.S. universities, all of whom must be closely monitored by schools as agents for immigration compliance and enforcement.

Another reason for compliance’s bright future even in the face of deregulation, one that is completely independent of regulators, is the increasing number of lawsuits on behalf of investors who believe they were misled by poor financial advice.

To sum up, the compliance specialty is not going away anytime soon. In fact, it is predicted to grow by all of the parties involved, as well as the Bureau of Labor Statistics and the Society of Corporate Compliance and Ethics, the principal compliance professional association.