Firms are more likely to worry about the SEC or state regulators than they are to worry about other regulatory bodies. This heightened awareness of federal regulatory reviews may stem from their belief that the SEC is better at identifying important compliance gaps than other regulators. Advisors are nearly twice as likely to believe the SEC is better at finding important compliance gaps than FINRA, and more than three times as likely to find them as state regulators.
Fewer firms express worry about FINRA regulators, though not all firms are necessarily regulated by FINRA. Only 28% of advisors believe FINRA finds important compliance gaps better than other regulatory bodies. Advisors’ perceptions of the SEC’s greater strength in this area may partially explain their lack of concern. One dually registered investment advisor (RIA) suggests the ground covered by the two agencies is similar enough that it’s only worth worrying about the more effective of the two. “As the SEC has become more engaged, FINRA has become redundant,” the advisor noted.