The 2020 Election and Potential Effects on Financial Services
Each election cycle brings uncertainty and inevitable change. With so much at stake in an already unpredictable year, you may be wondering what the outcome of the election could mean for the financial services industry—and how you can prepare.
Heather Priory, whose 17 years in the financial services industry included years of working with banks, and Arthy Kumar, a CFP® (Certified Financial PlannerTM) and a Chartered Financial Consultant (ChFC) with 23 years in the investment industry, would ordinarily chat with the Workiva blog team about this at the water cooler. But these are different times. So we took the conversation into cyberspace, and now you get to sit in on what they said. Here's what's been running through our subject matter experts' minds about what the 2020 election could mean for financial services:
Heather: Arthy, you and I were chatting about this before Election Day, or I guess we should say Election Week. Broadly speaking, public policy tends to swing between more regulation and deregulation. Of course, there's a ton of nuance in between, but everyone's waiting to see what the new administration will do.
Arthy: No matter which party controls which branch of the government, the period before, during, and immediately after the election usually sparks change and volatility that we need to account for in our work, especially in financial services.
Beyond the election and regulations
Arthy: We can't forget about the pandemic. The future is unknown, but we have to watch the potential short- and long-term impacts of COVID-19 on our business environment. Business shutdowns and disruption, fluctuating unemployment rates, and the possibility of more stimulus packages will create the need for more updates and disclosures by companies as they react to new business conditions and the upstream impact on larger enterprises. Some people are still struggling to get back on their feet. What will be the impact on small businesses?
Getting ready for the next four years
Heather: The bottom line, in my opinion, is that firms should always brace for change. Transition periods like this only make it more top of mind. Costs, oversight, and operational risk tolerance will likely change in some way, and compliance, legal, risk, and financial reporting teams will need to adapt. Financial reporting teams regularly adjust to changes in US GAAP Taxonomy and accounting standards for CECL (current expected credit losses), for example.
Arthy: Funds and variable products are adjusting to new iXBRL rules.
Heather: The best defense—and offense, frankly—is to use systems of work and vendors that allow you to be agile, nimble, and adaptable as disruptions come along, whether they come in the form of new legislation or regulations.
Stories from Workiva users with hints of what to do
While we wait for the dust to settle, it's important to note that change can also come from within. Agile systems can help you react to good surprises, too—like growth in the business. For example, the paralegals at VanEck moved beyond paper processes to manage prospectuses and other regulatory filings for a growing number of funds in a scalable way.
They can also help you stay proactive in managing risk. David Gamble said his company is connecting people, data, and documents in order to be nimble enough to update their Sarbanes-Oxley (SOX) risk assessment multiple times in a single year.
Stacy Gilbert is using Workiva to manage accounting policies and procedures and limit issues with version control, even as policies evolve. She uses a combination of track changes and blacklines to show key stakeholders exactly what changed. Supporting evidence is attached directly to the documents they support within the platform. Digital signoffs for final approval of policies are handled within the platform, which streamlines the approval process and provides transparency.
Help for the year ahead
This agility is what the team at Workiva has seen work well for the thousands of other organizations that have used our platform to create sustainable, repeatable reporting processes that are still flexible enough to anticipate and react to change.
You don't have to manage it all on your own. We'll be watching updates from Washington throughout the year and sharing thoughts here. Subscribe to the blog, and let's stay in touch.
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