2024 investment management regulatory outlook

A message from the Deloitte Center for Regulatory Strategy

Entering 2024, the investment and wealth management industries continue to face a period of intense regulatory and operational change. The Securities and Exchange Commission’s (SEC) rulemaking agenda under Chair Gensler has been historic in terms of both the volume and significance of regulatory proposals. At the same time, enforcement activity has increased substantially.

This sharp shift in the regulatory environment has left firms surprised by aggressive enforcement and hefty fines for widespread compliance failures. To avoid a similar pattern in 2024, firms should consider taking a proactive approach to their compliance program assessment efforts and expand, as needed, their remediation efforts to regulatory areas of focus. This will be in addition to enhancing their capabilities to adapt operational and compliance processes to comply with new and amended rules at scale given the volume of regulatory change on the horizon.

Investment managers face additional regulatory pressure from the Financial Stability Oversight Council (FSOC), which appears intent on designating new systemically important financial institutions (SIFI). SIFI designation for a large investment manager would impose a new layer of regulatory scrutiny from the Federal Reserve Board of Governors (FRB). The FRB supervisory processes are distinct and more open-ended than the SEC regulatory construct.

Technology and business transformation will be a through line for firms as they navigate this challenging environment. Although many changes will be driven by regulatory imperatives, we encourage our clients to maximize their return on regulatory-driven initiatives by also seeking opportunities to enhance their processes and business models with technology. In light of the challenges and opportunities that the current regulatory environment presents, we have chosen to focus this year’s outlook on impacts from the regulatory agenda, operational complexity, and transformation.

If you are interested in learning more about the investment management industry, check out our recently released 2024 investment management industry outlook here.