Advisors suffering from regulatory 'whiplash' after Gensler exit

Finance professionals are reeling from a period of regulatory “whiplash,” according to Charles Schwab’s Cayla Culver.

After years of rapid-fire rulemaking under former SEC Chair Gary Gensler, followed by a sharp slowdown under the new leadership of Paul Atkins and a prolonged government shutdown, many firms are struggling to keep pace, Schwab’s Head of Risk and Controls and Advisor Services told InvestmentNews at Schwab IMPACT 2025 in Denver, Colorado.

Despite this sea change, however, Culver warns that now is not the time to relax compliance efforts.

“It’s felt like a bit of whiplash for advisors because under Chair Gensler, we saw so many new rules being proposed constantly and it was very hard for advisors to keep up,” she said. “And now under Paul Atkins, we’re seeing an ease of that, and we’re not expecting as many new regulations to come out.”

The shift, compounded by the end of the record government shutdown—which concluded last night—has not paused the day-to-day responsibilities for advisory firms. Culver stressed that just because the SEC shut down—and slowed down ADV approvals and new firm registrations—and just because there is a new administration focused on deregulation, compliance tasks remain a priority.

“All those deadlines are still approaching,” she said. “All your filing... Things are still going to be due. So you really still need to focus on your day-to-day compliance and risk responsibilities.”

Reg S-P looms large

Top of mind, she added, is the implementation of the SEC’s Regulation S-P, which requires firms to have policies and procedures addressing the protection of customer information and records. Firms with more than $1.5 billion in assets under management must comply by December 3, 2025. Smaller firms face a deadline in August 2026.

Culver said: “This is a big lift for firms. We're urging them not to sleep on this... that one is still out, still going into effect. So, it's important that they pay attention to that.”

AI ushers in a new era of risk

Artificial intelligence is another area of growing concern, posing key questions for advisors: How should they disclose usage? Should they have procedures? How do they govern it? Culver says clear procedures and documentation are essential, given how fast the technology is evolving and the new avenues of risk it opens.

She said: “It definitely stresses me out, and I get that sense from a lot of people that work in risk and compliance. They kind of have the same reaction. I'm very excited by it because I'm hopeful that it can take some of those mundane compliance tasks that we do—where we're just really double-checking things—and it can automate that for us so that we can spend our time focusing on the items that are of real risk.

“But there is also risk that advisors need to be thinking about—do they know if people are using AI? Because it's possible that their employees are using it and they don't know. And so that's a risk to their firms.”

The new technology is also driving a new type of fraud: voice spoofing. Culver recommends that advisors, especially those serving vulnerable clients, take a proactive approach. “It's really important that you know somebody in their family and that you have them as a trusted contact that you can reach out to, to validate if something else is going on with this client.

“Advisors have such an important role in stopping those because they know the client better... Just in general with voice spoofing, it's really important that you don't just rely on knowing the client's voice anymore, which is scary, but having some type of client authentication—whether that's a password that you never email or a family code word—is really important.”