Financial firms have never had more ways to communicate — or more ways to get it wrong. Increasingly, advisors use a combination of email, text, social media, AI tools and other communication methods to correspond with clients, prospects and internal teams. But while communication preferences have continued to expand and evolve across regulated industries, many compliance monitoring and archiving tools have lagged behind.
In an effort to keep pace with regulatory requirements and the emergence of new communication channels, some firms might layer new applications onto their compliance stack. While this may satisfy short-term obligations, it is rarely sustainable. Over time, a disjointed mix of regtech tools can widen the gap between how firms govern communications and what regulations actually require.
Both FINRA and the SEC have made it clear that regulated entities, including broker-dealers, investment advisers and credit ratings agencies, must comply with recordkeeping requirements. Failure to do so can prove costly.
From December 2021 to November 2024, recordkeeping infractions tied to off-channel communications alone have resulted in more than $2 billion in SEC penalties. According to Spodek Law, combined penalties for off-channel communications from the SEC, Commodities Futures Trading Commission (CFTC) and FINRA exceeded $3.5 billion since December 2021. The consistency of these enforcement actions points to a systemic breakdown in how digital communications are supervised and archived.
How System Fragmentation Can Create Blind Spots And Increase Vulnerability
Oversight becomes challenging when it depends on coordination across disconnected tools and platforms. Although each application might function adequately on its own, these tools rarely share data in a way that provides a single, unified view of communications. Firms that cannot produce complete communication histories risk enforcement actions, fines and greater scrutiny.
Without integration, compliance teams might need to manually reconstruct advisor interactions — pulling records from multiple systems, standardizing formats and rebuilding timelines. This not only strains operations but could increase the risk of error and slow responses to regulatory inquiries. It might also mask gaps that could surface under an examiner’s further scrutiny.
Data Security and External Oversight Add Complexity
Some regtech solutions rely on external processing or third-party review teams. This can introduce questions about where sensitive client communications are stored, who can access them and how review decisions are documented.
When compliance teams lack visibility into how data is processed, reviewed and stored — particularly when third parties are involved — accountability can become blurred. As regulatory expectations evolve, firms are increasingly responsible for understanding not only what their tools do, but how information moves across systems and organizational boundaries.
Accountability can become blurred.
Systems that rely heavily on disparate platforms or external dependencies can make it harder to establish clear oversight and defend compliance practices during examinations.
Regulators Expect Demonstrable Control
Regulatory guidance is clear: Firms must be able to retain, supervise and produce complete communication records upon request across all channels where business-related communication occurs. For broker-dealers and investment advisers, communication governance extends beyond email and text to any platform used for client communications.
Advisors may bear the burden of proof to demonstrate that their firm has not engaged in business via off-channel communications. The 2025 FINRA Annual Regulatory Oversight Report defines “off-channel communications” as business-related messages sent or received via channels not authorized for business use. Examples include personal email, chat services and third-party messaging.
Why Context Matters In A Multi-Channel World
One of the most significant limitations of fragmented compliance environments is the inability to assess communications in context. Traditional surveillance approaches often evaluate messages individually, based on keywords or static rules. This can generate excessive noise — flagging benign messages — while missing genuine risk that emerges only when conversations are viewed as a whole.
One of the most significant limitations of fragmented compliance environments is the inability to assess communications in context.
Contextual understanding means seeing a conversation as a thread, recognizing intent and understanding word strings as a sequence rather than isolated phrases. As advisors shift fluidly between email, messaging apps and collaboration tools, oversight that only captures fragments could miss key behavioral cues. Without contextual insight, compliance teams risk spending time on false positives while potentially overlooking legitimate concerns buried across channels.
Practical Steps To Reduce Fragmentation
Addressing fragmentation begins with an objective review of how existing systems work together — or don’t. Here are some practical steps advisors can take to assess their current regtech solutions and evolve them into a cohesive platform:
● Take inventory of every communication channel in use, including informal and social platforms, and assess actual coverage versus assumed coverage.
● Evaluate how well tools integrate and whether data can be accessed, analyzed and retained without friction.
● Establish clear governance around AI usage, including documentation, human oversight and accountability frameworks.
● Prioritize surveillance and archiving solutions that support cross-channel visibility and secure data ownership.
● Where feasible, reduce complexity by consolidating tools or aligning them under a unified compliance strategy.
Solving The Regtech Platform Puzzle Requires Cohesion, Not More Technology
Similar to an unfinished puzzle, fragmented regtech solutions require a plan for cohesion, not more pieces. Without integration, transparency and governance, even advanced platforms can leave firms exposed.
Fragmented regtech solutions require a plan for cohesion, not more pieces.
As communication methods continue to evolve — and as regulators emphasize comprehensive, demonstrable supervision — firms that proactively address fragmentation will be better positioned to meet expectations, protect clients and strengthen internal controls.
In this environment, the goal should not be more tools, but more effective compliance systems that reflect how firms actually communicate and can stand up to regulatory scrutiny.
Larry Shumbres is the Founder and CEO of Archive Intel, an AI-based compliance platform built for the financial services industry.
